Behavioral finance studies the psychological influences and emotional factors that affect investors' decisions, leading them to act irrationally. While traditional finance assumes that traders are fully rational, behavioral finance recognizes that emotions, cognitive biases, and social influences often lead to poor decision-making. Understanding how emotions impact trading can help traders manage their actions and improve their overall performance.
Key Behavioral Biases in Trading

Overconfidence Bias: Traders often overestimate their knowledge and ability to predict market movements, leading to excessive risk-taking and overtrading. Overconf...