Which statement is true about contrarianism and herd behavior?I. The herd or uninformed are usually responsible for driving a trend up or down.II. Being contrarian means to buy when the under-informed public is selling and to sell when the under-informed public is buying.III. The well-informed or smart participants are usually contrarian at tops and bottoms.IV. Many contrarians are also trend followers during the trend phase.
A. Only II is correct.
B. Only I, II, and III are correct.
C. Only III and IV are correct.
D. All are correct.
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Which statement is true about price barriers?I. Price barriers and many chart patterns exist because of behavioral phenomena.II. Professional traders and specialists are aware of predictable learned behavior and as such may try to take advantage of the situation by orchestrating a profitable false breakout.III. It is conventional to place buy orders above a barrier and sell orders below it.IV. Whenever price approaches a barrier, it will initially encounter a trend-promoting force.
A. Only I is correct.
B. Only I, II, and IV are correct.
C. Only I and II are correct.
D. All are correct.
Cognitive dissonance may be the underlying cause for which of the following scenarios?I. Misinterpreting information so that it is in line with a trader’s current expectations of the market.II. Selectively exposing information that agrees with a trader’s accepted view or analysis of the market.III. It makes it much less challenging for directional traders to keep up with the constant flow of price action.IV. Mentally compartmentalizing information in such a way that the overall impact of conflicting information is minimized, breaking it down into a less significant and meaningful threat.
A. Only I and II are correct.
B. Only I, II, and IV are correct.
C. Only III is correct.
D. All are correct.
Which of the following behavioral phenomena is most likely be responsible for the creation of a symmetrical triangle formation?
A. Magical thinking.
B. Certainty bias.Your selection is incorrect
C. Loss aversion bias.
D. Ego defensive attitudes.
Which of the following may be responsible for the persistence of a trend?I. Contrarianism.II. Hindsight bias.III. Ego defensive attitudes.IV. Representativeness bias.
A. Only I, II, and III are correct.
B. Only II and III are correct.
C. Only II, III, and IV are correct.
D. All are correct.