Fear and greed and two of the strongest human emotions. Most traders and investors experience fear and greed, which often drives behavior. Fear is one of the primary reasons that market participants scurry to exit markets when time get tough. Greed often keeps them in risk positions long after the risk-reward profile shifts.
One of the best ways to avoid losing money as a result of fear and greed is to approach a market with a plan. Knowing how much capital you are willing to risk and what the profit target should be is a rational way to keep fear and greed in check.
The more volatile assets tend to move higher and lower when they evoke fear and greed. Silver is a market that tends to move on the market's overall sentiment. Therefore, fear and greed are always lurking in the precious metal. Silver volatility tends to be 50% higher than gold price variance. Since the final week of May, the price of silver moved from $14.245 to a high at $19.54 per ounce on the continuous COMEX contract, and $19.75 on the active month December futures. Those who bought silver early, likely felt like they were riding a cash machine in the precious metal. Those who bought late and were looking for silver to burst through $20 per ounce were guided by greed. Now that silver has pulled back to under $17.50, fear could be creeping back, and if the price of the metal moves lower over the coming sessions, the emotion will intensify.
Many market participants wind up buying when they should be selling and vice versa. I believe that the current correction in the silver market will lead to a buying opportunity at a higher low. Volatility is a curse for some, but for nimble traders with their fingers
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