When you're drowning in so much losses, aka Painus Maximus, I can assure you the last thing on your mind is TA.
Same reason why people buy into a hot housing market...yet they will line up for cheap gas to save a few bucks lol.
The psychology of newbies selling at the lowest price is primarily that they often recognize a downward trend when it has long been formed and is well visualized. That is, everyone can see with the naked eye that the trend is downward and then sales begin... when the trend is already starting to reverse)).
is that area expected by pro traders and calculated somehow by hedge funds? or is it purely a reaction of both the noobs exiting at peak of pain( stock slowly creeping downwards and draining the rest of their position) and pros reacting to that selloff that they see on charts. i understand the psychology behind it where noobs (me included) sell at the same time but im curious whether the selloff is planned by the big boys or its purely a domino effect and initiated by noobs in pain?
The reason why new traders sell at the bottom or seemingly the bottom is cuz 1) we don't get bailouts and 2) we don't have crystal balls. Because you never know whether that's the true bottom or if the price is going to go down further. It's only from hindsight that you see that you sold at the bottom but if the price happens to go down further from the point that you sold, you didn't really sell at the bottom. Nobody has a crystal ball unless you have insider information and hindsight is always 20/20 but what you see at that moment never is and as a trader, we can only trade according to the information that we see at that moment. At that moment, the price was tanking and we need to stop the loss. The price could go back up after you have sold but it could also go down further and what's even worse than selling at the bottom is you keep the position open and the price goes down even further and you eventually get a margin call or even blow your account. As a trader, we fight for another day. If your account is blown, you won't have anything to fight for another day and you are finished. Back to the day job you go. Nothing wrong with that but we would much prefer to trade and be free and since we are not those Big Banks who can just go to the government for bailout when we blow our account, stopping our loss even it means selling at the bottom is the only way to ensure that we can still be in the game at least for another day. And tomorrow is another day and you would never know what tomorrow can bring but you have to have enough funds to survive until tomorrow.
If I had unlimited capital then I clearly would keep my position indefinitely. Limited capital as well as leverage forces to close position at some time so it's not a surprise that some traders are stopped out near the bottoms