In this life, there are things we do not like or it has not made us like it enough to buy it, and sometimes we still buy it without understanding why. So this article will tell everyone about that reason. If you find it interesting, please give me a like and a comment to share your thoughts!
Coming to our main character "Herd mentality effect", the herd mentality is a negative psychology not only for investors in particular but also a general psychology of humans. In investing, people are easily influenced by the crowd leading them to make orders/investments without researching the market or market data. This is the most common and easily fallen into mentality that leads investors to risks and losses.
Some manifestations of herd mentality:
Buying/selling when the market is rising/falling sharply: When seeing many people investing in a coin, a type of stock, land, etc. They fear that they will miss the opportunity to make money and this is probably the main reason that causes investors to fall into the herd effect.
Trusting rumors/unverified information: The bright side of humans is that they are easily convinced by the information provided by others, especially when many people present the same rumor/information, it becomes more credible (to them).
===> This often happens with new investors, those with weak opinions or no opinions, and sometimes even some long-time investors can easily fall into this.
So what can be done to avoid/simplify this type of disturbing psychology?
-> Build a personal investment plan, have a specific strategy, information on the internet is for reference only and be very rational.
-> Conduct thorough market research on the investment project you are about to put money into to gain knowledge and avoid being influenced by the majority.
-> Emotional management: be patient, maintain calmness in the face of market fluctuations, more heads can be better than one, but remember it is just for reference.
