Market psychology refers to the emotional and psychological factors that influence the behavior of investors and traders in financial markets. It encompasses the collective sentiment of market participants, which can lead to trends such as fear, greed, or euphoria. Understanding these emotions helps explain why markets may move irrationally, even when economic fundamentals suggest otherwise. The concept of market psychology is closely related to behavioral finance, which studies how cognitive biases affect decision-making. Factors like herding behavior, where individuals follow the actions of others, and loss aversion, where the fear of losing outweighs the potential for gains, play significant roles in shaping market dynamics.