how to investor mind thing | 5 psychological mind set investors guide
- 5 psychological pitfalls that investors should avoid
- - Adhesive adhesions
Divisive choices occur when people rely too much on the past when making decisions about the future - that is, they ‘strengthen’ the past. This choice of options causes a lot of problems for investors and is an important factor in ethical finance.
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- Religious
Also known as mobilization, it is a strategy passed on to our ancestors and is believed to be mathematically powerful. Unfortunately, this is not always a good strategy in the financial market because following the audience is not always the right thing to do.
Ironically, this group of speculators among investors are the main reason for the 'bubbles' in the financial markets. Investors often 'farm' to maintain their reputation and rely on past trends or successful investors with the same stock in the past. However, when a company finds a bad machine to enter or go into a shopping spree when the stock is ready, people quickly discard the stock.
As an investor, you should make your own research and decision making for all investment decisions and protect the temptations that follow most.
- - Opposition to loss
Loss avoidance occurs when people work very hard to avoid losses, because the pain of loss works twice as much as the joy that comes from investing profits. Simply put, earning a dollar is twice as much pain as earning a dollar.
- Avoiding Loss - How To Destroy Your Investment
As emotional people, we often make decisions to avoid losses, when investors withdraw their money from the market, which can lead to excessive accumulation of money or after market adjustments. Investors decide to keep their assets to avoid losses. In the form of money.
However, this emergence of market insecurity in a volatile environment could lead to inflation in the economy. During the 2007 financial crisis, the US economy experienced an estimated $ 943 billion.
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Investors can avoid the trap of risk by talking to a financial adviser to learn how to reduce their losses and increase their portfolio to a higher profit margin.
- - Outstanding trap
Self-confidence is an asset when you invest in the stock market, but overconfidence or drugs can lead to a collapse for investors. Many investors, especially those who are well-educated and well-versed in financial and stock markets, think they know more than an independent financial advisor.
It is important to remember that the financial market is a complex system that has many variations and cannot be conquered by one person. In the past many investors have lost large sums of money because they have lost their sense of self-confidence and ignored anyone's advice. Overconfidence is the most dangerous form of neglect.
- - Diagnosis of bias
A confirmation trap is created when investors seek out information that confirms their point of view and ignore any conflicting opinions.
They believe that when investing in a stock market produces a profit, the investor will filter out any information that conflicts with their beliefs. They take the advice of people who gave bad advice and make the same mistakes. This is a biased decision as investors look at only one side of the coin.
For example, an investor has a stock that is declining because someone else is doing it. It helps investors to verify each other's reasons for saving the investment, however, it does not work over time because both investors are at a loss. Investors should look at the latest trends in stocks and evaluate their investments accordingly.
The human mind is a complex, intricate system of things that influences our decisions. The pressures we face in life are subdued and are overcome by the mental attitudes mentioned above. Overconfidence, seeking reassurance from others and getting comfort from others in the same boat are some of the factors that influence the investment decisions we make.
No human is perfect, and no human can literally take a person for granted. The best way to reduce these effects is to open up new information and think openly about how the investment will affect you personally. You should seek the advice of industry experts to ensure that your investment decisions are based on well-researched information that can help you make an impartial decision.
