Short Term Stock Investment Decision: Fear or Greed
Year: 2025
Type: conference-paper
Study design: Observational Study
Abstract: Short-term stock investment decisions are often shaped not only by market fundamentals but also by psychological and emotional factors, particularly fear and greed. This study employs a quantitative approach to examine how these emotions influence trading behavior among retail investors in the Indonesian Stock Exchange (IDX). A structured survey was distributed to 120 active short-term investors, utilizing a Likert-scale instrument to measure levels of fear and greed in relation to trading actions, including buying, selling, and holding decisions. Data were analyzed using multiple regression to test the significance and strength of emotional variables on investment outcomes. The findings indicate that fear exerts a significant negative influence on short-term profit realization (β = –0.32, p < 0.05), as investors experiencing higher levels of anxiety tend to sell prematurely during market volatility, thereby limiting potential gains. Conversely, greed demonstrates a significant positive association with trading frequency and risk-taking behavior (β = 0.41, p < 0.01), suggesting that investors with heightened greed are more likely to engage in overtrading and speculative strategies, which increase exposure to potential losses despite occasional short-term gains. Collectively, the results confirm that emotional biases are strong predictors of short-term trading outcomes, challenging the assumption of investor rationality proposed in efficient market theory. This research contributes to the behavioral finance literature by providing empirical evidence from an emerging market context. The findings also have practical implications, highlighting the need for emotional regulation and risk management strategies to support more rational decision-making among retail investors.
Authors: Mochamad Iqbal, Puji Lestari, Ascaryan Rafinda, Hasan Al Jafa
Institutions: Jenderal Soedirman University, University of Debrecen
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4413922859