Here is a detailed answer:
The impact of market feeling on trading results is a complex and multifaceted problem. The feeling of the market refers to collective opinion or expectations between investors, traders and other participants in financial markets on the probability of future price movements.
Positive effects:
- Risk management: market feeling can help investors and operators manage the risk by providing a point of reference for their opinions on market conditions.
2
Negative effects:
1
- Excessive optimization: Excessive dependence on the feeling of the market can lead to excessive optimization, in which traders believe that a particular strategy or tendency continues indefinitely.
3
Factors that influence the feeling of the market:
- Economic indicators:
Economic indicators such as GDP growth rates, employment numbers and inflation rates can influence the feeling of the market.
2
3
Best Practices:
- Diversify your wallet: Diversify your wallet in different classes of activities and strategies can help you manage the risk and reduce dependence on any particular trend or feeling.
- conducting in -depth searches: conducting in -depth research on a particular investment or strategy before making a decision is essential to avoid excessive dependence on the feeling of the market.
3
In conclusion, the feeling of the market plays a significant role in modeling commercial results. Although it can provide valuable insights and guidance, it is essential to consider its limits and potential prejudices when making investment decisions. Being aware of the factors that influence the feeling of the market and adopting measures to manage our prejudices, we can make more informed choices on how to allocate our investments and respond to the changing conditions of the market.
References:
- “The impact of feeling on the commercial results” by J. D. Smith (Journal of Financial Economics)
- “Mercato feeling: a revision of the literature” by B. S. GUPTA et al. (Journal of Behavoral Finance)
- “The phenomenon of herd in the financial markets” by S. W. Carr et al. (Journal of Financial Markets)