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What is behavioral finance?
Behavioral finance is a field of study that explores the impact of psychological, emotional, and social factors on financial decision-making. It seeks to understand why individuals deviate from rational decision-making and how these biases affect markets. Behavioral finance theories suggest that people often make irrational financial decisions due to cognitive biases such as overconfidence, anchoring, and framing effects. These biases can lead to suboptimal investment decisions, market inefficiencies, and mispricing of assets. Behavioral finance has important implications for investors, as it highlights the importance of managing emotions and avoiding common biases in investment decision-making.

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