Stock market though best described as a scientific method for price discovery, it not truely scientific. The movement in stock prices is more or less driven by speculation or mass psychology of the world.
Somebody have defined stock market as the reflection of mass pshycology of the world, their hopes, fears, etc. To have more clarity we need to seggragate psychology in to rational psychology and emotional psychology. Rational psychology indicate the general perception of the mass. It is formed based on the direct and immediate analysis of the available news flows. But it is seen that this common man's belief comes true very raely. we may say rational psychology affect only 10% in market movement
The rest 90% is influence by emotional psychology. Emotional psychology indicate the greedy and fearful reaction of the mass.These actions are unplanned and un controllable. This emotionaly psychology leads to high risk ventures by participants. this over-trading extreme greed of panic may result in undeserving moves in prices of stock. tis abnormal price moves attract further speculative actions on both buy side and sell side.
Hence, as the emotional psychology dominate the price change volatility in the market wiill persist. similarly un-justifiable moves in stock market may continue. To become a successful trader you need to realise this psychological effect besides the fundemental and technical appraoches. And one should learn to foll the trend and never buck the trend
Abbas vattoli
Assistant Professor in Commerce
AMAL College of Advance Studies
Myladi Nilambulr
Somebody have defined stock market as the reflection of mass pshycology of the world, their hopes, fears, etc. To have more clarity we need to seggragate psychology in to rational psychology and emotional psychology. Rational psychology indicate the general perception of the mass. It is formed based on the direct and immediate analysis of the available news flows. But it is seen that this common man's belief comes true very raely. we may say rational psychology affect only 10% in market movement
The rest 90% is influence by emotional psychology. Emotional psychology indicate the greedy and fearful reaction of the mass.These actions are unplanned and un controllable. This emotionaly psychology leads to high risk ventures by participants. this over-trading extreme greed of panic may result in undeserving moves in prices of stock. tis abnormal price moves attract further speculative actions on both buy side and sell side.
Hence, as the emotional psychology dominate the price change volatility in the market wiill persist. similarly un-justifiable moves in stock market may continue. To become a successful trader you need to realise this psychological effect besides the fundemental and technical appraoches. And one should learn to foll the trend and never buck the trend
Abbas vattoli
Assistant Professor in Commerce
AMAL College of Advance Studies
Myladi Nilambulr
sir,
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