The psychological analysis of human behavior is beneficial in an array of fields. Anticipating how an individual will react to a given situation can give insight to financial trends, marketing analysis, and many other areas of business. The problem with the analysis of an individual’s behavior is that individuals rarely follow recognizable patterns that can be considered dependable criteria for investments. Therefore, the trend has leaned towards technical analysis which studies the psychology of the masses in relation to financial trends and stock market fluctuations. This tendency comes from the understanding that, unlike individual psychological behaviors, the mass psychology is far more predictable.
Individuals tend to be uncertain as to what they want or what they need. The confusion between wants and needs create a sporadic range of spending trends that are not simple to chart or document. As the personality and psychological differences among individuals vary from one spectrum of the charts to the other, it is nearly impossible to gauge the trends that will come from the individuals. Additionally, the financial means of the individuals create a scenario where the spending trends of an individual cannot predict the impact that those trends will have on the overall stock market. Other factors such as family values, personal choices, and educational backgrounds also impact the spending trends and psychology of the individuals. With all of these areas of influences, the stock market cannot depend on the individuals for dependable trend predictability.
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"Psychology of Market Trends".
However, the fact that there are areas of influence that impacts the individual psychology and resulting spending trends has caused analysts to realize that other influences also impact the trends. For example, individuals feel safer when trends are followed by a group. There is a comfort for the individual to follow when the masses are also making the same choices. Trends are developed through the existence of the masses and the tendency of individuals to follow the trends that the masses have set. Although the mass psychology is developed through a collection of individuals, it is in the collection that the trends are analyzed. The concept of the majority creates a uniform or mass psychology which leads to a more dependable predictor for market traders.
Mass psychology is still invested in the individuals who are included in the masses and therefore the science of the study is not exact. The consistencies in this form of market analysis comes with the knowledge that trends will both come and go while generally following the conformity of the masses. Therefore, the analysts must constantly be aware of the changes in trends that result from changes within the psychology of the masses. There is no exact science marking these changes as the psychology of human behavior is ever changing. However, there are certain factors such as weather changes, technological advances, and health and safety scares that can help the analysts to predict how the masses will react.
In conclusion, there are significant similarities and differences between the psychology of an individual and that of the masses. Similarities include the instances of change and the sporadic influences that can cause these changes. However, the key difference is based on the pure size of the masses. It is more difficult to put into motion a larger population.
Therefore, if analysts can recognize the beginning of a trend in relation to mass psychology, it is possible to buy or sell at the right time of the upswing or downward spiral of the stock market.
