A systemic modeling of the minds of stock traders

• Main Author: Rony Baby John.
• Other Authors: Foo Check Teck
• Format: Final Year Project
• Language: English
• Published: 2010
• Subjects: DRNTU::Engineering::Systems engineering
• Online Access: http://hdl.handle.net/10356/20725
• Institution: Nanyang Technological University

Stock Market crashes are known to spread havoc and panics in the financial world and often wipes away millions of money from the investors. It is a fact that there exists a certain amount of “Collective investor Psychology “in the stock markets. Owing to the complex nature and composition of the stock markets, it is very difficult to gauge the mindset of the investors at the onset of a Stock Market crash. However, the analysis of the intraday data can throw light on the Collective Psychology of the investors at the onset of a crash. This report explores the dynamics and patterns associated with the Stock Market crash and thereby throws light to the collective mindset of the of the investors at the onset of a stock market crash. The patterns so obtained as a result of this analysis reflects the existence of a three phase phenomenon namely the Free Fall, the Resistance phase and the Final Descent in the crashing of the stock markets. Furthermore as the “Stock Market Crashes” can be called as a ‘Catastrophe’ that strikes the financial world, this report brings to light the striking similarities in the pattern of Airplane crashes and the Stock Market crashes. This similarities in crash pattern underlines that the panic experienced by the investors at the onset of a Stock Market crash is an extended scenario of the mindset of a pilot while executing an Emergency landing of the aircraft