Understanding Investment Psychology

Understanding Investment Psychology

Investment psychology, often referred to as behavioral finance, examines how psychological influences and emotional responses can affect investment decisions and market outcomes. Recognizing and understanding these psychological factors can enhance decision-making processes and improve investment performance.

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Fear and Greed

Fear and greed are powerful emotions that can drive market fluctuations and lead investors to make irrational choices. Fear can cause investors to sell off assets prematurely during market dips, while greed can lead them to take on excessive risk during bull markets. 2차전지 관련주

Herd Mentality

Herd mentality refers to investors’ tendency to follow and mimic the investment decisions of the majority, often without their own analysis. This behavior can lead to asset bubbles or exacerbate market crashes.

Overconfidence

Overconfidence can lead investors to overestimate their knowledge and ability to predict market movements, often resulting in taking on too much risk or trading too frequently.

Cognitive Biases in Investing