5 Psychological factors that influence stock market investing

Published : 20 Apr 2023

Anchoring bias is basically refers to over reliance on initial piece of information. It may be correct in the beginning making you feel confident about the bet being good but over time the trend might change and may prove incorrect.

1.  Anchoring Bias

Herd Behavior bias refers to when the investors follow others (such as others calls or tips) instead of doing their own research. This also a reason behind a lot of pump and dump schemes or the creation of a bubble like the dot com bubble in early 2000s

2. Herd behavior bias

Sunk cost bias refers to the behavior any investor exhibits when their investment decision goes wrong but they still stick with it incurring more loss and hope that it will sooner or later turn into their favor.

3.  Sunk Cost bias

Overconfidence bias refers to that behavior which makes certain investors think they are better than they actually are. They believe they are better than experts or even the market. They usually make mistakes by taking rash or poor decisions or by trying to time to the market.

4.  Overconfidence Bias

Confirmation bias refers to the behavior that investors exhibit when they ask advice to someone once and it turns a bad decision but still go to them for advice again. 

5.  Confirmation bias