Psychological Investing

Psychological investing refers to how emotions and cognitive biases influence investment decisions. Investors may react to market trends based on fear, greed, or herd behavior rather than rational analysis. For example, fear of losing money can lead to panic selling, while the excitement of rising prices might encourage risky investments. Understanding these psychological factors can help investors recognize their biases, make more informed decisions, and avoid common pitfalls. Ultimately, being mindful of emotional influences can lead to more disciplined and strategic investing.