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The unfortunate but plain truth is that many, if not most, retail traders lose money.
Why is this? And how can traders best prepare and equip themselves to avoid losing money?
Although there is no simple answer, the largest contributing factors are twofold: psychology and information.
Information
Decisions are only as good as the information they are based on. Modern markets are complex and move at the speed of light. Large brokerages and institutional investors like Blackrock Inc. BLK have access to highly sophisticated analysis tools that give them the 360-degree view necessary to consistently execute profitable trades.
For your average investor trading on Robinhood Markets Inc. HOOD, there is a real lack of useful tools and actionable information available. Ziggurat Technologies is attempting to change this with innovative tools designed to provide retail investors with the same level of market intelligence normally reserved for hedge funds.
Psychology
People are largely predictable. Basic human instincts and tendencies, while serving differing evolutionary and survival needs, cause most people to make poor trades.
Panic buying, often driven buy blind greed, and poorly timed selling, due to fear are chief among the causes of poor trades.
As humans, we look to others to show us what we should do. The more people who are doing something, the more likely others will follow suit. This is called social proof. It is also the exact opposite of what you want to do in the market.
People see others buying up a stock like crazy and that leads to fear of missing out. If so many others are doing it, it must be the right thing to do. This panic buy usually means you are buying in just before an imminent correction.
And the reverse is true. These same traders panic as the price begins to fall and sell out well below their buy in price, turning a loss on paper into reality.
As Berkshire Hathaway Inc. BRK Founder Warren Buffet famously said, “Be fearful when others are greedy and greedy when others are fearful.”
While that advice is easier said than done, Ziggurat Technologies believes that AI may be the answer to help investors more consistently find value by looking where others are not looking in the markets.
This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.
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