Psychological traps: five mistakes to avoid in the stock market

You often need strong nerves on the stock market.

Not only beginners like to be guided by emotions sometimes.

Five pitfalls not to fall into when investing.

Anyone who

wants to

invest

their

money *

in the stock market

not only needs a lot of brains, but often also needs

strong nerves

.

But unfortunately there are also some

psychological traps

that investors on the stock market should not

fall

into, as the

Business Insider

describes.

Even long-standing professional investors are not immune to them.

According to the business

magazine

,

beginners in particular

should

avoid

these

five psychological mistakes when investing money

:

• Herd behavior:

  If many people make the same decision, it does not have to be the right one.

  What sounds logical, many investors would sometimes ignore, reports

  Businessinsider.de

  and cites the Gamestop case as a current example.

  "The recent Gamestop price turbulence was a good example of how herd behavior affects many investors," says Kim Felix Fomm, investment expert at Raisin, in the

  Business Insider

  article

  .

  "You can see that investors have made a lot of profit in a short period of time and want to be part of the hype."

• Overconfidence:

  Unfortunately, people also tend to overestimate themselves.

  But that could be expensive on the stock market.

  "The danger on the stock market also lies in ascribing good decisions to oneself, but always finding external reasons for bad decisions," explains the expert in the article.

• Loss aversion

  : But there is also the opposite of overconfidence, namely the fear of making losses. "Daniel Kahneman's experiments have repeatedly shown that a loss of 50 euros hurts investors more than they are happy about a profit of 50 euros," explains investment expert

  According

  to

  Business Insider

  , the phenomenon was fomm.

  However, if you keep postponing an investment out of fear of losses, for example, that is not productive either.

  The expert explains in the article: “There are always reasons not to invest.

  Statistically, the best time to get started is now, if you want to invest your money over the long term.

  The earlier you start, the better. "

• Confirmation error:

  With the flood of messages, selection is not always easy.

  Another psychological mistake could be that

  Business Insider

  according to the fact that - if one is convinced of a share - only read the positive analyzes of the value.

  And practically fades out the negative in order to confirm itself.

• Anchor effect:

  The anchor effect is a term from psychology that describes that the market assessment of whether something is worthwhile or not has, figuratively speaking, to do with the “anchor”.

  These can be values ​​that one orientates oneself on.

  Or a certain price.

  But is it also realistic?

  The investment expert explains the behavior

  using

  the example of shares, according to

  Business Insider

  : “A share is quoted at 100 euros and an investor is considering buying it.

  Before he buys it, the share plummets to 80 euros - suddenly it seems cheap to the investor because it just cost 100 euros and he was about to buy it. "

(ahu) * Merkur.de is an offer from IPPEN.MEDIA.

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