why does price tend to fall faster than it rises?

Discussion in 'Trading' started by 1a2b3cppp, Sep 1, 2011.

  1. This seems to be the trend on daily charts.

    Put another reason, red bars tend to be bigger than green bars.

    Any reason? Panic and emotion?



    The answer my mentor gave to me for this very same question was:

    "Fear is a much stronger emotion than Greed".

    Hope this helps.
  3. Because most market players are long and they hate losing more than loving winning. :D
  4. Figured it out did ya? Use it and profit from it.:D
  5. Because a slap upside the head comes quicker than a pat on the back.
  6. Handle123


    Many young, or inexperienced or longer term traders and investors only take the Buy side, and that is main reason there are so many "jagged" moves up, different ways to get from the "those who don't know or won't". Some will say that selling short is Un-American, but it is un-American not too. We live in a capitalism way of life in USA, making money is the American way of life whether buying or selling short. But the exchanges and our government prefer we buy as they have made the GAME more Pro buying with the rules in place, up tic rules, divendend rules if short and retirement rules, brokers have easier time to sell client the whys of buying than selling short.

    I don't believe what moves the market is Greed, it is all FEAR that makes moves up or down, fear of being on wrong side of trade, fear of missing moves, fear of gain and fear of loss. Since there are many many more folks on the long side of stocks, any kind of heavy selling is going to cause huge bars down. Takes a third of the time to drop like a rock than to go up. It is less risky to sell short than to buy, markets seldom go sideways in down moves, whereas there is more chop, sideways, in markets that go up.

    When markets drop, the Specialists in NYSE will always buy it, but since there are tons of orders coming in, they will offer to buy at much lower prices causing it to drop even more and more protective stops get hit and becomes a snowball effect. I much much rather go short in stocks that to buy, much bigger profits, much faster profits and tighter risk.
    beginner66 likes this.
  7. +1
  8. Isn't shorting harder and riskier in a bull/bullish market?
  9. You can justify anything in the market with a limited set of data. Incomplete information.

    From my conclusion: both the rises and falls are just the same in severity over the long term. One or the other tend to predominate in the short term depending on the market whims.
  10. Handle123


    No, Comes down to finding stocks that are making or near to making 52 week lows, or using weekly barcharts to find chart patterns that offer topping patterns.

    Risk is associated with education 99% of the time, if you are not aware of what you are doing, be like throwing money to the winds and hoping.

    When I first started trading long term commodities, selling new contract highs had incredible risk due to fear of limit moves, now my trading has limited risk cause of buying calls to hedge my short futures position.
    #10     Sep 2, 2011
    beginner66 likes this.