Mandatory reading

Have you ever accidentally smacked your head into a door or a wall?  Your first reaction is to wanna punch that door, as if it's the door's fault! This is obviously a stupid reaction but one nonetheless we tend to have. It's an example of an emotionally driven X-system response which usually dominates the way we initially react in a stressful situation. Emotionally charged responses often drive an investor's decision when they buy and sell. This flawed tendency and other flaws are covered by the studies of behavioral finance. During my CFA studies my favorite topic by far was behavioral finance. Not only was it the most interesting but it's the most effective in terms of helping you actually make money in the market and preventing you from losing it. The biggest enemy you face in this game is yourself.  In addition to emotionally charged decisions; biases, anchoring, herding, overconfidence are some other key pitfalls. Behavioral finance studies the flaws in human thinking and behavior which leads to poor decision making and inefficient markets....and man, there are dozens of flaws  that we have. It's very critical to be aware of these flaws. There's a book you can find online called "The little book of Behavioral Investing".. I strongly recommend it. The stuff you learn in this book is also useful for non-investing life as well.