Understand the psychology of the stock market

By CEO Espen Grønstad

Technical analysis and behavioural finance use investor psychology to predict future stock market developments. Investor psychology is based on the fact that humans to a large extent are driven by basic needs, in which pain and pleasure are important reasons for the choices we make. Even though companies and technologies have changed, we are influenced by the pain of losing and the joy of winning. Consequently many of our choices are largely based on emotions and not rational assessments.

Fundamental analysis faces similar problems. Large, reputable stock brokers arrive at different fundamental conclusions, even though they have access to the same information and underlying assumptions. This shows that the subjective human factor in making the assessment is more important than the actual circumstances. We need to take this into account when making our investment decisions.

Studying the stock price allows us to identify patterns and trends that represent the greed, fear and insecurities experienced by investors. Sustained movements when large market sentiments are moving are hard to stop, and they give us, as chart analysts, a big advantage. Through solid research and the development of algorithms in behavioural finance, Investtech has shown excess return compared to market index. Read more about our results on our Research pages or try our analyses for free for 14 days.

 

h_PivotPoints

 

 

Written by



Espen Grønstad
Partner & Senior Advisor - Investtech

While technology changes, the expectations and psychology of the
investors are the same. That is why chart analysis is so important!

Articles:

Buy signals from rising trend

Opportunities following a falling Stock Exchange

67 % success for buy signals

"Investtech analyses the psychology of the market and gives concrete trading suggestions every day."

Espen Grønstad
Partner & Senior Advisor - Investtech
 


Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.


Investtech guarantees neither the entirety nor accuracy of the analyses. Any consequent exposure related to the advice / signals which emerge in the analyses is completely and entirely at the investors own expense and risk. Investtech is not responsible for any loss, either directly or indirectly, which arises as a result of the use of Investtechs analyses. Details of any arising conflicts of interest will always appear in the investment recommendations. Further information about Investtechs analyses can be found here disclaimer. The content provided by Investtech.com is NOT SEC or FSA regulated and is therefore not intended for US or UK consumers.

Titlex

OK
Free Trial Now