Thursday, May 13, 2010

THE PARTICIPANTS

Wall Street, the famous financial area of New York, is named after a wall built in Manhattan
in the early settlement days, to stop animals wandering. Today the farming connection lives

on in the language of the brokers; namely bulls, bears, hogs and sheep.

Bulls are buyers: a bull fights by striking upwards with his horns. A bear, on the other hand,
fights by striking with his paws. Bulls look up, bears look down, and the price is a constant
fight between the two. So, who are the hogs and sheep? These are the majority of investors
trampled underfoot. A hog is greedy and takes positions that are too large and is wiped out by
small, adverse moves, or holds profits for too long in the hope that prices will go on for ever.
Sheep are passive and fearful followers of the media, gurus, brokers and friends. They bleat
at everyone when they lose, and cannot accept they were responsible.
The farming analogy is very close to what happens in reality. Only strong bulls and bears
make money. The crowd-following characteristics of the sheep, combined with the greed of
the hog, characterises most losing traders in the market.

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