By MOFSL
2022-03-04T07:38:39.000Z
4 mins read
5 Psychological Biases for Investing Decisions
motilal-oswal:tags/stock-market
2023-01-05T07:09:20.000Z

Psychological Bias

Something that may have slipped your attention may be the field of behavioural finance. Yes, there is such an area of study, and it can explain why investors may behave the way that they do, taking investment decisions as a result. A psychological bias or a behavioural bias occurs when we use mental shortcuts while making complicated decisions. The bias tends to propel our behaviour in a certain direction, and this influences what decisions we take in financial circumstances. Biases are unconscious ways of thinking and these affect our behaviour, particularly investment behaviour.

Psychological Bias in Finance and Investment

Investors’ behaviour is often studied in the markets, and this is based on how investors interpret specific information and act on it. For example, while undertaking online trading, what makes an investor make a trade, and another forgo it? These are the questions that behavioural finance askes, among other pertinent questions. While making an investment decision, your judgement can well be biassed, and this may result in you making erroneous  investment decisions.

Psychological Bias in Investment

There are five common types of psychological bias, also known as cognitive bias in investment. Biases influence your relationship with handling money. However, if you are aware of these, you could possibly control them. Check out the biases and how they affect you financially:

Move Past Your Bias

When you are an investor, you need to make conscious decisions based on knowledge and many kinds of analysis. You can do this with the MO (Motilal Oswal) Investor, by opening an account an app that gives you sound investment advice, and helps you reach your investment goals.

Related Articles:   How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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