Why You Need An Investment Methodology

By John Sage Melbourne

All markets show the expectations of the marketplace participants in reaction to existing market conditions and anticipated market developments.

Individuals tend to be normally greedy when they believe the price will rise. On the other hand,they can quickly end up being managed by fear and panic when they think that costs will fall. Human nature in this respect is the same in all investment markets all over the world.

All investment has a component of speculation and all speculation need to in turn be based on premeditated calculation. There are different categories of market participants:

• The trader who works on the time frame of a couple of days or weeks
• The speculator who works on the time frame of a couple of weeks to less than a year and
• The investor who works on a time frame of numerous years or more.

All market participants need to be prepared to take a contrary position to the marketplace when the crowd moves the marketplace above or listed below its real worth.

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Each participant must keep a clear head,devoid of emotional reaction.Your crucial tool is a rational objective methodology on which to make sound investment choices.

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