Mooers' Strategies: How to take advantage of emotional trading with the PSY indicator?

Hi mooers!
Congratulations! We have passed halfway through this Technical Analysis Challenge journey.
Six sessions have already been released in the past three months, including MA, Bollinger Bands, RSI, KDJ, etc. Over 800 mooers have joined this challenge. How many topics did you participate in? Or are you still new to this challenge?

It's never too late to join! Like @Milk The Cow said: "I have heard a lot about indicators like this, but I'm kinda lazy to explore it. Ty to @Meta Moo , I'm kinda 'forced' to self upgrade because the reward lured me in. " So no worry, beginners are welcome to join the challenge!

In this article, we will review how mooers used the PSY indicator.

Let's catch up with the definition of it first.
The Psychological Line (PSY) is an indicator based on the presumption that people will resist paying/selling more for a share than others unless the stock continues to move up/down.

1. Why is PSY so important to learn?
To illustrate this point, a talented mooer @JM investor shared two fun facts you should not miss and indicated that:
"the market is not rational, but emotional. Even the greatest scientist of the world are not able to measure or calculate the market rationally. I guess, both of them would be happy if they know there is an indicator "PSY" that could measure the people emotion in the stock market."

2. How to use it?
@JM investor told us 3 ways of using it：
Learning point 1: PSY indicator and trend
Learning point 2: PSY indicator and the reversal
Learning point 3: PSY indicator and the divergence

Mooers' Strategies: How to take advantage of emotional trading with the PSY indicator?

Tap to view full post>>

@Milk The Cow shared a step-by-step instruction on how to use this indicator and summarized it as follows:
"How to tell if people are inclined to buy a share?
PSY above 50% = buyers in control
PSY below 50% = sellers in control
PSY equal 50% = ??? "
And it is combined with a real case to help you understand.

Tap to view full post>>

@steady Pom pipi not only shared an informative guide but also designed a quiz. Wanna try it?
Tap to view full post>>

Quite a detailed and impressive sharing, right?
I am guessing a lot of you are charmed by this indicator.
However, as many mooers have mentioned, PSY is not a panacea. Just keep in mind that "cautious" is the eternal keyword in investment.

3. Why PSY doesn't always work?
@doctorpot1 reminded you that: Using only PSY will make you CRY
Why is that?
"If you used PSY on these stocks, without considering the macroeconomic factors and fundemental analysis, you would have CRY.
Firstly, I'm not a big fan of technical indicators, because human are creatures that will try to create pattern out of everything. That's just how our brain works, it create mental shortcuts using pattern recognition so as to work less."

@bullrider_21 also told us “the PSY index doesn't always work and must be used with other indicators. Use the indicators that work best for you.” and offered a guide on the "PSY and MACD" and "PSY and Bollinger Bands" combinations to help you do better in your trade.

Tap to view full post>>

In addition, you can review all about the PSY indicator through the following links:
How to take advantage of emotional trading with the PSY indicator?
Part One: How to tell whether people are inclined to buy a share?
Part Two: How to use PSY in real cases?
TA Challenge: Emotional trading is bad? PSY doesn't think so!

By the way, check out our latest challenge TA Challenge: How to use the SAR to spot reversal signals? Keep up and learn!

Thank you for your time! See you next time.

Disclaimer: This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal.
Tap for more details

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more