The Neuroscience Behind the Investor Panic

The Science behind the Investor Panic
More likely, the neuroscience behind it. In the past five years, neuroscience has made breakthroughs in understanding how the human mind works.
When investors dump mutual funds in panic, it raises questions about the decision of their purchase. From a biological perspective, these investors refuse to face the emotion, which builds up and explodes in an impulsive decision. With an MRI, we can watch a live brain make a risk-and-reward decision. Two seconds before we start thinking about the facts, there is a feeling part already weighing in. The successful traders focus on what the other people are doing now and are likely to do later, where the weak players focus on prices.
How to deal with panic? Face the fear of losing it all and ask how likely that outcome is.