Extras | The Typical Investor

- How does he behave? -

Stock Trading and market movements nowadays have a lot to do with psychology and human behavior when it comes to Up's and Down's in a stock which the human being, in this case, the investor, owns.

People invest their money in stocks or assets in the hope of making even more money out of the invested capital. Often people try to justify their market entry with hope, personal research or simply because of the fact that their neighbor or good friend gave them a recommendation..."You gotta have this company in your portfolio, the stock price is going to double in the next weeks! But don't tell nobody, that's top secret!"...

You see, reasons for market entries vary and everybody has a different interpretation of why something happened to a stock, why a stock didn't behave like this or like that, or why a stock is definitly going to increase or decrease in value. Everybody has different opinions and explanations and that is what drives and moves stock prices...different opinions, different hopes and in the end it is all mass psychology. If more people think that a stock is cheap in relation to the number of people who think the stock price is too high, the price of the stock will go up, probably...and vice versa.

Only the ones who learn to deal with losses reasonably, will be successful and profitable investors in the long-term. Look at the following chart and see how beginners and headless investors react on movements in their stocks...