Why We Buy High and Freeze Low: The Strange Psychology of Market Behaviour

Ever noticed how people sprint into the markets when prices are sky-high…

…and then turn into statues the moment things drop? Market behaviour...

If markets had feelings, they’d probably roll their eyes at us.

From the outside, it looks ridiculous.

Buy high? Fear low? It goes against every logical trading principle ever written.

And honestly?

You’d be forgiven for thinking half the world is trading with their emotions set to ‘chaotic neutral.’

The highs spark euphoria, the dips trigger dread — and understanding this psychology is step one to consistent trading.

The Frenzy og market behaviour: “Everyone’s Getting Rich — Except Me!”

Picture it:

Your friend Dave just made “a tidy 12%” on a stock he can’t pronounce. Some YouTuber is shouting about a “life-changing setup.”Your social feed suddenly resembles a casino highlight reel.

And somehow even your kettle is judging you.

This is classic FOMO — Fear of Missing Out.

It’s not a punchline.It’s a well-documented behavioural bias studied by Kahneman, Tversky, Shiller — the behavioural finance heavyweights.

When prices rise, our brains whisper: “Everyone else can see something you can’t… better get in before it’s too late.”

It’s social pressure.It’s imitation.It’s panic in a suit.

When the market drops and logic leaves the building — the raw panic that fuels fear-driven trading decisions.

The Freeze: “It’s Dropping… Better Not Touch It!”

Now flip the chart.

Prices dip. Assets are effectively on sale. Logically, this should be the moment buyers appear like bees to honey.

Instead? Most people back away as if the candlesticks are about to bite.

This is loss aversion — losses hurt roughly twice as much as gains feel good. It’s one of the most robust findings in behavioural psychology.

So when the market falls, instead of “bargain,” the brain screams “danger.” And the same asset that looked like a “must buy” a week ago suddenly looks like cursed treasure.

Humans, eh?

The Peer Effect: Crowd Behaviour Is Contagious

Researchers call it herd behaviour. Not flattering, but accurate.

People copy groups when:

• the environment feels uncertain,

• the decisions feel risky,

• and the assumption is “everyone else probably knows more than me.”

Financial markets tick all three boxes.

One Princeton study even showed that people change their risk-taking purely because they believe others are watching.

In other words: Crowds don’t just influence traders — they infect them.

Why This Matters: Chaos vs Process

Here’s the bit most beginners don’t realise:

Buying high and avoiding dips isn’t a market problem.It’s a human problem.

The charts aren’t the issue.The psychology is.

This is exactly why I teach structured, process-driven trading at CLiK.

A good process keeps your head screwed on when everyone else is losing theirs. It stops emotional button-pressing.And it turns fear into clarity.

From Fear to Fundamentals: What We’ll Cover Next

In the next post of this series, we’ll break down:

“Why Your Brain Treats Red Candles Like Danger Signs (And How to Trade Anyway)”

Spoiler:Your biology reacts faster than your strategy — but you can train it.

Real Traders. Real Behaviour. Real Results.

At CLiK, we help traders understand markets and themselves — because consistency starts with psychology, not indicators.

No hype.No panic.Just structure, discipline, and confidence.

Stay tuned — the behavioural deep-dive has just begun.