psychology/perception certainly play a big part in trading, especially when dealing with the more speculative end of the market.
it can work both ways, by propping up the buy side to give the illusion of buyer strength or stacking the sell side to give the impression the stock is going nowhere but down, unfortunately it is just a side effect of playing in the spec end of town.
this is where experience/trading stratergy comes into play to try and work out the underlying fundamentals that are currently driving each individual stock and making an informed decision whether to buy/sell or hold.
trying to use GBP as an example:
chart wise :
as Kevi showed recently it is respecting an upward channel so a good entry point would be 19-19.5c, with a stop say around 17c should the chart break down.
fundamentally :
the company is well cashed up, with some exciting oil exploration targets
trading psychology :
as traders we know that historically oil exploration companies run into spudding/results from exploration wells. So for me buying at the bottom of the upward trend channel is the safest entry point, with a view to holding at least to the announcement of the well spudding, with a stop say at 17c in case the chart breaks to the downside.
with the well due to spud in just over two weeks, I would expect some accumulation to begin heading into early february.
altough it is important to keep an eye of market depth, in this case, I focus my attention on two things, the stop loss point at 17c and the time frame being when the well spuds, I tend not to worry about market depth until either the well spuds or the stop loss is triggered, this way emotions can be taken out of the equation when market depth shift's around.
Beechmere, it's hard to put into words my own individual trading stratergy, but I hope some of the above helps.
