The relationship between volatility in the stock market and investor psychology

[klassicdoll]

Several academics have since examined the relationship between investor sentiment and stock price volatility and discovered that it can greatly increase stock volatility. Investor behavior tends to exhibit patterns during times of increased volatility, including flight to safety, herding behavior, overreaction, and loss aversion. The effects of investor behavior on market volatility are demonstrated by historical instances such as the Great Depression, the Dotcom Bubble, and the Global Financial Crisis.

Opinions on this?

 

[King Belieal]

Whenever there is speculations of the stock market going down, there is always panic buys and sales of stock. That panic alone would propel the uncertain movements of variables that determine the stock market.

 

[Suba]

In the securities market, volatility is often associated with large changes in one of the investment instruments, whether up or down, generally more than 1%. Of course it will have a big impact on investor psychology, novice investors often panic when prices fall and sell all their stocks.

 

[deucher]

Everything depends on the mood of investors in the market, because people themselves control the price. The main factor is emotions, because without emotions there would be no such patterns and no price movement