What is market psychology?

Market sentiment is the idea that market movements reflect (or are influenced by) the emotional state of market participants. This is one of the main topics of behavioral economics - an interdisciplinary field that explores the different factors that lead to economic decisions.

Many people believe that emotions are the main driving force behind financial market fluctuations. It is the general fluctuating psychology of investors that creates the so-called psychological market cycle.

In short, market sentiment is the general feeling of investors and traders regarding the price movements of an asset. When market sentiment is positive and prices increase continuously, it is said that the market is bullish. The opposite of a bull market is a bear market, which is when prices continuously decline.

Therefore, sentiment is made up of the personal views and feelings of all traders and investors in the financial markets. Another way to look at market sentiment is the average level of overall sentiment among market participants. 

But, as with all groups, there is no majority opinion. Based on the theory of market psychology, the price of an asset tends to change continuously to reflect the general sentiment of the market - which is also always volatile.

-------------

Grasp the psychology of the market cycle.

Gain a deeper understanding of the relationship between market sentiment and asset price movements.

Read more if you are interested ⤵️

https://academy.binance.com/vi/articles/the-psychology-of-market-cycles