THE CROWD

The Crowd includes the professional traders, smart money, insiders, fund managers and neophytes.  As each participant buys and sells, the feelings and emotions of millions of traders combine to create huge psychological waves that move the markets. 

They say “the trend is your friend”, and “don’t fight the Crowd”.  However, as market trends emerge, age and ultimately reverse, the Crowd is necessarily always wrong at market tops and bottoms!  Therefore, it is our goal at TheGoldenBull.net to place our trade against the Crowd and consensus opinion – going long when the Crowd is most fearful and short when the Crowd is most enthusiastic- by studying the past and observing early changes in market trend.  This counter-intuitive approach is one of the best ways to remove the emotional aspect of trading and to profit consistently.

Too many Investors and Traders ignore the psychological and emotional aspects of The Crowd.  All our fundamental research and technical analysis is incomplete without an understanding of the underlying Crowd behavior driving the development of traditional, recognizable chart patterns.  By understanding the underlying Crowd behavior, charts can become a powerful “predictive” tool.  Of course, we don’t trade on predictive analysis, but as mentioned – the more information and understanding we have about the market landscape, the better our odds of success. 

They say “a picture is worth a thousand words” - I believe this is also true for charts.  In keeping with the method and style of our analysis at The GoldenBull.net, let’s look at a chart as the best way to make a point.  Let’s examine the underlying Crowd behavior of a recognizable chart pattern that occurs in all time frames – The “Ascending Triangle”:

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