#TradingPsychology
The difference between a correction and a crash: Don't let emotions drive your investment.
While the difference between them is significant and very important. A correction is a natural movement in the markets occurring when prices rise for a period and then begin to retreat by a reasonable percentage restoring balance before continuing to rise. On the other hand a crash is a sharp and sudden decline in which the market loses a large part of its value in a short time, usually associated with major events or a loss of confidence.
The common mistake is to treat every drop as a crash which drives some to sell at a loss out of fear. The market needs conscious reading and logical analysis, away from emotions and quick reactions.
If you see the market declining, don't rush. Ask yourself: Are there strong news? Is the market correcting after a long rise? Calm assessment may save you from wrong decisions.
Always remember: markets correct and this is normal. Don't be a victim of your mood swings but base your decisions on understanding and analysis not fear and greed.