7 Shocking Stock Market Psychology Hacks

❝Rough seas swallow excited sailors.❞

High volatility in the stock market is a sign that investors have psychologically decided that the price of the asset is uncertain. In highly volatile markets, objective financial factors that influence price action and trend direction are often replaced by subjective psychological factors. Against the influence of psychological factors such as fear in the investment plans of buyers and sellers, market research, the real value of the business, market analysis fall into the background. Expectations, herd psychology, and volume increase their impact on prices. All this paves the way for technical analysis trading. If you want to make a profit in this period, you should stay on the screen, listen to the pulse of people from the news frequently, anticipate their expectations, and not hesitate to use technical analysis tools such as the Fibonacci channel. Trend analysis and Elliott Wave Theory are great methods to decide where to buy and sell against a volatile market's psychological factors. You should not forget that in price uncertainties, investors are fond of indicators like RSI, MACD, Stochastic RSI, and Bollinger bands. As an investor do not forget that fear and greed will make you lose in this period.

❝In the deep and dark ocean, whales create huge waves.❞

If a positive or negative price change continues for a long time, the clients of the asset become nervous and risk management becomes difficult for the masses in terms of human psychology. That's why trends don't last forever because they have fuel based on both finance and economics and market psychology. The longer the trends, the deeper the ocean. Whales (rich investors) start to make an impact. The whale effect becomes the sole mainstay of the psychologically nervous investor. Huge and sudden positive and negative price changes occur as trends spread over time. So as the trend gets longer, you should calm down. You have to be on the alert until whales affect the stocks. You should know that long trends are not places to take risks without including dangerous elements of greed or fear. If you are determined to take this risk, you must be one of the first to move or one of the most patient in the whale movement.

How to predict whale movement?

What causes the whales to choose your stock to create a trend collapse of all the markets, stocks, and investment opportunities (for example, interest)? The state of the world economy (for example, global changes such as covid-19 affect whale behavior and therefore the entire world financial markets), interest rates, FED's interest decisions, unprofitable or profitable business start-ups, or classical business investments, and difficulty in capital management trigger the whale movement. It should not be forgotten that whales use objective market tools and act independently of human psychology(such as technical analysis trading). Therefore, investors who do not follow the state of the world economy, do not listen to the news, do not examine changes in interest rates, do not make research about business opportunities, and do not follow the prices of investment instruments such as Eurobond and dollar bond, think that this trend collapse in the financial markets is random, regardless of whether they are from buyers or sellers.

❝The most common investing mechanism is to rely on emotions.❞

Investing and attributing value to an asset brings with it involuntary subconscious psychological expectations in the mind of the investor. At this point, human psychology starts to create alternative scenarios and subconsciously creates buying and selling plans from these scenarios, and decides where to stop. As a result of these decisions, psychological stops and limits are formed that do not exist concretely, but whose effect is felt in the prices and volatility of the market. These invisible stops and limits, which have positive and negative impacts on the stocks and investing regardless of finance and economy, form many trend channels as well as most of the levels called support and resistance in technical analysis trading. This is shocking! In a highly volatile market, these psychological stops and limits affect the market more than concrete stops and limits!

❝Everything has a price, and everyone guesses the price in their mind.❞

The thought of receiving an asset appears together with the psychological value of that asset. You tend to buy if the price of the asset is lower than its psychological value and sell if the price of the asset is higher than its psychological value. If you can predict the average psychological value of the asset in the minds of traders, you can see whether the masses are currently inclined to sell or buy based on price. But how? The average price in the minds of buyers and sellers is determined by the latest historical trend and its length in volatile markets. In stagnant markets, a new average price appears in minds based on the current trend and the length of that trend. In both scenarios, the length of the trend determines the confidence in the psychological price. If the trend is an uptrend, traders tend to view the peaks as psychological prices. If the trend is a downtrend, traders tend to view the average price in the trend as the psychological price. In general, this behavior is a result of the psychological immunity developed in human psychology against greed and fear. For this reason, buying and selling trends often follow each other. While it is very difficult to know the psychological price precisely because the brain holds data based on emotions in the head but sudden changes and catchy levels manipulate the psychological price.

❝Inconsistent situations create consistent winners.❞

What do people tend to do when something doesn't go as planned? Investors change their current approach in case the price deviates from the indicators. So how do they change it? Considering the opposite of their current approach and other factors, as most traders interpret the divergences as a weakening of the current trend. This common behavior causes the current trend to really weaken, and even the new expectations of investors, which are opposite to their old expectations, become reality. If you want to make money from stocks by making use of human psychology as well as market research and real value analysis, you should act as their precursor together with people in divergences as in every other condition.

❝History repeats itself.❞

Human psychology cannot work independently of patterns. The human mind involuntarily searches for continuous patterns, especially repetitive patterns. Human psychology loves patterns. This has a huge impact, from the music we listen to, to the investments we make in the stock market. Investors' intuition carries the thought that what has happened will inevitably repeat itself. This results in repetitive but differentiated patterns on the chart. Investors tend to repeat because old investors (many of them are winners) want to win again, and the primitive psychological circuits of new investors want to fit in with the tribe.

❝Free cheese is in the mousetrap.❞

Investors who are rich enough to manipulate the market, especially in intraday movements, are well aware of the movement of technical analysts and human psychology. That's why they set up traps to catch technical analysts and excited investors with heavy buys and sells at many points. Artificial support and resistance breakdowns, artificial trend disruptions, even artificial trends! You must be calm. You should lean on areas, not sharp lines. You should pay attention to volume, ignore price changes without volume. Finally, you should definitely choose high-volume, well-established stocks, cryptos, and markets. Greed and fear are vital fuel for whale traps. Just remember to wait for the candle.