Psychology plays a big part in stock market. As stock market runs by human so human mind plays a big role here. Sometimes investors tend to take wrong decision for this.
Here some psychological factors that every investor should know on order to succeed in stock market.
There is a very simple formula in stock market. If someone follow this he should not face any lose in stock market. The golden rule is “BUY LOW SELL HIGH”. Many people know about this but why they cannot stick to this rule. The answer is human psychology.
As we know fear and greed is a moderator in stock market. Many people get trapped by this emotion.
Three psychological factors mainly dominate stock market.
Social proof theory impact
If we see others buying stocks, then with using our brain we assume it is the best time to buy. We do not think the logic behind it. We should always use our own brain to take decision. However, it is not bad to seek suggestion from experts.
Social proof alone however, does not create such a strong effect that we will act so contrary to our own interests. The other key force at play is scarcity.
Fear
When price start falling down we become afraid, though we know, it is the nature of stock market. Sometimes we become a victim of panic sell. We need to analyze stock market in a cool brain.
Greed
It is also plays a very big role. When price is getting high, we become greedy and think we also can be benefited. We do not judge other consequences that lead us towards a dangerous way.
so the final word is, in every situation we have to think carefully and have to analyze the market.
Here some psychological factors that every investor should know on order to succeed in stock market.
There is a very simple formula in stock market. If someone follow this he should not face any lose in stock market. The golden rule is “BUY LOW SELL HIGH”. Many people know about this but why they cannot stick to this rule. The answer is human psychology.
As we know fear and greed is a moderator in stock market. Many people get trapped by this emotion.
Three psychological factors mainly dominate stock market.
- Social proof theory
- Fear
- Greed
Social proof theory impact
If we see others buying stocks, then with using our brain we assume it is the best time to buy. We do not think the logic behind it. We should always use our own brain to take decision. However, it is not bad to seek suggestion from experts.
Social proof alone however, does not create such a strong effect that we will act so contrary to our own interests. The other key force at play is scarcity.
Fear
When price start falling down we become afraid, though we know, it is the nature of stock market. Sometimes we become a victim of panic sell. We need to analyze stock market in a cool brain.
Greed
It is also plays a very big role. When price is getting high, we become greedy and think we also can be benefited. We do not judge other consequences that lead us towards a dangerous way.
so the final word is, in every situation we have to think carefully and have to analyze the market.
No comments:
Post a Comment