Also, many
traders only feel comfortable entering when the market is currently moving in the direction they like.
Not exact matches
Traders also tend to
feel revenge after a loss, and they carry out this revenge by jumping back into the market to try and make back the money they just loss, which of course usually
only leads to more losses, thus further cementing the cycle of bad trading habits.
What happens next is that
traders often enter a trade on a whim again (see the pattern here) but this time they are at even greater risk because they are
feeling euphoric and they decide to risk more than usual,
only to see all their recent profits evaporate in the blink of an eye.
The herd mentality causes
traders to enter the market typically
only when it «
feels» safe.