🔑 Key Points
Emotions like optimism, greed, fear, and panic directly affect market ups and downs.
Common traps: #FOMO ,loss aversion, and ignoring facts (cognitive dissonance).Social media and human “herd behavior” can make these emotions even stronger.
💡 Introduction
Warren Buffett once said: “The market is a device for transferring money from the impatient to the patient.”
Markets are not just about numbers — they’re about human emotions. Our brains react strongly when money is involved, and these reactions can push us to make choices that are not logical.The amygdala (fear center) triggers panic during market drops.
The prefrontal cortex (reward center) makes us overconfident during market booms.This is why trading often feels like an emotional roller coaster.
📈 Uptrend (Bull Market) – The Dopamine Rush
When prices rise, optimism spreads. Our brain’s reward system releases dopamine, making us feel excited.
#FOMO kicks in (“I don’t want to miss this!”). Social media fuels hype with success stories and big profit screenshots.
Example: Meme coins like #Dogecoin , #shiba #INU or #TRUMP coin rise fast mainly due to hype — not real value. This excitement can create bubbles, where prices grow way beyond the real worth. Eventually, bubbles burst.
📉 Downtrend (Bear Market) – The Fear Zone
When prices fall:
Emotions shift from hope to fear.The amygdala makes us panic sell.Loss aversion makes losses feel worse than gains feel good.
At the bottom, many give up completely — often at the worst time.Eventually, the market calms, and slow hope returns.
🧬 The Brain’s Role in Market Moves
Dopamine Pathway – Linked to pleasure and reward. Makes us chase gains in bull runs.
Amygdala – Triggers fear and quick reactions during market drops.
Cognitive Dissonance – Makes investors ignore reality, hoping losses will vanish.
Mirror Neurons – Cause herd behavior. When we see others buying or selling, we copy them.
🏁 Final Thoughts
Spot extreme optimism or pessimism.
Avoid falling for #FOMO or panic selling.
Make calmer, smarter investment decisions.
