Reflecting on the Highs and Lows: Driven by Emotional Contagion and the Herd Effect
Key topics of the post:Reflecting on the Highs and Lows is our new blog series that explores the common psychological mechanisms that affect traders' decisions.Emotional contagion and the herd effect can drive reactive trading by amplifying collective sentiment and creating pressure to follow others.To break free, you must stop, reflect, and trust your personal research and systems to guide your decisions.Imagine this: you are watching the charts as prices surge. Your social media is flooded with green candles, excitement, and speculation. Suddenly, everyone is talking about the same token. You weren't planning to ride the wave – but now, staying out feels like missing an opportunity. That urge to do what everyone else is doing is hard to ignore.