So the reality is of all the people who take actions in the market buying selling buying selling buying selling, there are all sorts of reason that you can think of why they decide to get into a trade or get out of a trade.

For example, another example is that if let’s say I have 1 million shares of Apple stocks and decided to sell it, what are the potential reasons why I decide to sell for stocks?

Maybe it’s fundamentals, maybe the technicals don’t look good or maybe it could be because I need the money right? So I holding on to Apple stocks but I need to sell Apple stocks because I have an urgent need for the cash, so I decide to sell Apple Stocks.

Does it get anything to do with the fundamentals of Apple?

So the point is this, people’s buying and selling action in the market is due to hundred and thousand of one reason you can ever possibly think of okay and fundamentals is just one aspect of why people make those kinds of decisions.

That is the reason why it’s very common to see that despite the fundamentals of a stock or company looking fantastic, okay, looking very well, but the price keeps on falling and falling and falling and falling and falling okay.

Now, if the fundamental is really good, of course, in time to come, it will definitely still recover right, but the thing is, do you think about the opportunity costs when the fundamental looks good but it’s still in a downtrend and a downtrend and you keep on buying, holding or even if you average down.

Can you see the opportunity cost if it takes another two years to finish its downtrend before it starts to recover because of his fundamentals, do you realize you lost two years of opportunity by holding to a stock that’s not giving you returns.

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Philip Teo

Founder & CEO at Traderwave Pte Ltd
Philip Teo is an entrepreneur, speaker and trading coach who specialises in the field of Technical Analysis of the financial markets. He is currently the Founder and CEO of Traderwave Pte Ltd, a financial technology company that offers a web charting application to global traders. He has conducted many trading seminars and appeared on national television before. He is also currently an official speaker and trainer with SGX Academy. Learn more about him at his Google+ Profile, LinkedIn Profile and Facebook Profile

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