This Element is an excerpt from Trading from Your Gut: How to Use Right Brain Instinct & Left Brain Smarts to Become a Master Trader (9780137047680) by Curtis Faith. Available in print and digital formats.
Swing trading techniques that leverage psychology to profit from market overreactions and underreactions.
Predicting market prices themselves is very hard. Predicting human reactions to them is somewhat easier. But easiest of all is detecting what has already happened and reacting to that. If the market overreacts, you can make money by anticipating a return to “correct” price levels. If the market underreacts, you can also make money that way....