Behavior Repetition and Stock Price Movements

The purchasing pushes the price up
The rise in price in itself causes a decrease in demand and then a decrease in the price again

The selling pushes the price down
The decline in price in itself causes an increase in demand and then an increase in the price again
the same behavior repeats itself again and again

In financial markets, the shares of any corporation are limited: when the trader buys shares these shares will not be available for other traders to buy them. so the share prices will increase after buying. when the price goes up the demand will decline.
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because of the nature of market behavior price movements will repeat itself

Behavioral repetition is important in the complex world of stocks, influencing stock prices. This includes herd behavior, bias psychology, and periodicity in market movements. Awareness of these components enables investors to make reasonable decisions even though stock prices are also affected by external forces like the economy and politics. On repetition, getting deeper into the complexities of human behavior reveals much more about what drives stock price fluctuation.

Herd Mentality In the Stock Market

Herd mentality is an element of human behavior repetition that affects stock prices. People are inclined to undertake the same steps as those around them, choosing these investment decisions. It will result in herd buying or selling, which will make prices go in one direction. For instance, if a group of investors begins to purchase shares in a certain stock, other people can view this as an indication that they anticipate the stock increasing in value and consequently driving up its price. For instance, when one investor begins to sell a stock, others might interpret it as meaning that the share's value will soon drop, prompting them to sell the shares, thus causing a fall in the share price.

Market trends and patterns are additional factors influencing the repetition of human behavior, including herd mentality and psychological biases. Technical analysts frequently review past price charts and patterns to forecast upcoming price changes. Human behavior repetition explains these patterns, such as head and shoulders, a double top, and triangles. Recognizing these patterns allows traders and investors to employ them as signals for entering into a purchase decision or exiting a sale, affecting the price of stocks.

The Impact of Psychological Biases on Stock Price Fluctuations

Psychological biases are also a facet of human behavior repetition, influencing stock price fluctuations. People may suffer from several cognitive biases (i.e., anchoring, confirmation bias, and being overconfident), ultimately affecting how they invest in a particular option. This may make certain people keep repeating particular behavior tendencies like always evaluating wrongly the cost of one stock or undervaluing their chances towards development. Such periodic practices can cause irrational changes in the stock valuation without applying fundamental research theory.

Human Behavior Repetition to Inform Strategic Investment Decisions

Investors and traders can benefit by understanding how human behavior repetition affects stock price movements. Individuals will be able to identify patterns in certain behaviors and market tendencies that they will then use to inform their investment decisions. Nevertheless, it should be noted that stock prices are determined by many other issues, including the economy, the company's position in the market, and geopolitics. Consequently, people's replication behavior is one of several issues influencing stock market rates.

Technical Analysis and Chart Patterns
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Most traders use technical analysis to look at price charts and patterns to predict subsequent stock price changes. Some of these chart patterns imply that human behavior is similarly repeated many times. These patterns mirror the predictable conduct of buyers and sellers, such as Stock Strategy patterns. Historical price data are used by traders who analyze past market patterns, which help them to predict forthcoming pricing trends.

Overreaction and Underreaction

There are also overreactions and underreactions in human behavior in the stock market. News creates exaggerated price movements because investors overreact to them. This can lead to opportunities whereby people will find repetitions and take advantage of the overreactions. Unlike the overreaction that results when the market responds immediately after gaining new info when it takes long for a market to absorb a new piece of data entirely, it is known as under-reaction, and prices adjust slowly but surely.

Conclusion

Human behavior recurrence is among the notable forces that influence movement in stock market prices in the fascinating stock market arena. Investors find lots of helpful insights by navigating through herd mentality, psychological biases, and market trends.
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Disappearing Money
Before we get to how money disappears, it is important to understand that regardless of whether the market is rising (a bull market) or falling (a bear market), supply and demand drive the price of stocks. And it's the fluctuations in stock prices (and the points at which you buy and sell shares) that determine whether you make money or lose it.

Buy and Sell Trades
If you purchase a stock for $10 and sell it for only $5, you will lose $5 per share. You may believe that that money goes to someone else, but that isn't exactly true. It doesn't go to the person who buys the stock from you.

For example, let's say you were thinking of buying a stock at $15, and before you do so, the stock price falls to $10 per share. You decide to purchase at $10, but you didn't gain the $5 depreciation in the stock price. Instead, you got the stock at the current market value of $10 per share.

In your mind, you may think that you saved $5, but you didn't actually earn a $5 profit. However, if the stock then rises from $10 back to $15, you will have a $5 (unrealized) gain.
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The same is true if you're holding stock and its price drops, leading you to sell it for a loss. The person buying it at that lower price—the price you sold it for—doesn't necessarily profit from your loss. That's because their entry point is the lower price and they must wait for the stock to rise above that level before making an unrealized (or realized) profit.

No one, including the company that issued the stock, pockets the money from your declining stock price. The money reflected by changes in stock prices isn't tallied and given to some investor. The changes in price are simply an independent by-product of supply and demand and corresponding investor transactions.

Short Selling
There are investors who place trades with a broker to sell a stock at a perceived high price with the expectation that it will decline. This is called short-selling.

If the stock price falls, the short seller profits by buying the stock at the lower price and closing out the trade. The net difference between the sale and buy prices is settled with the broker.

Although short-sellers profit from a declining price, they're not taking money from you in particular when you lose on a stock sale. Rather, they're conducting independent transactions and have just as much of a chance to lose or be wrong on their trade as investors who are long (own) the stock.

In other words, short-sellers profit on price declines, but it's a separate transaction from bullish investors who bought the stock and are losing money because the price is declining.

So the question remains: Where did the money go?

Implicit and Explicit Value
The most straightforward answer to this question is that it actually disappeared into thin air, due to the decrease in demand for the stock, or, more specifically, the decrease in enough investors' favorable perceptions of it to move the price down by selling.

But this capacity of money to dissolve into the unknown demonstrates the complex and somewhat contradictory nature of money. Yes, money is a teaser—at once intangible, flirting with our dreams and fantasies, and concrete, the thing with which we obtain our daily bread.

More precisely, this duplicity of money represents the two parts that make up a stock's market value: the implicit and explicit value.
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Implicit Value
On the one hand, value can be created or dissolved with the change in a stock's implicit value, which is determined by the personal perceptions and research of investors and analysts.

For example, a pharmaceutical company with the rights to the patent for the cure for cancer may have a much higher implicit value than that of a corner store.

Depending on investors' perceptions and expectations for the stock, implicit value is based on revenues and earnings forecasts.

If the implicit value undergoes a change—which, really, is generated by abstract things like faith and emotion—the stock price follows. A decrease in implicit value, for instance, leaves the owners of the stock with a loss in value because their asset is now worth less than its original price. Again, no one else necessarily receives the money; it simply vanishes due to investors' perceptions.

Explicit Value
Now that we've covered the above somewhat unreal characteristic of money, we cannot ignore how money also represents explicit value, which is the concrete value of a company.

Referred to as the accounting value (or book value), the explicit value is calculated by adding up all assets and subtracting liabilities. So, this represents the amount of money that would be left over if a company were to sell all of its assets at fair market value and then pay off all of the liabilities, such as bills and debts.

Without explicit value, the implicit value of the company would not exist. Investors' interpretation of the financial health and performance of a company is based on its explicit value. Explicit value is t

Ramadan; Month of Great Victories
By: Abdullah Abdeen
 

     Ramadan is the ninth month of the Islamic calendar. During this month, Muslims abstain not only from eating, drinking and intimate relationship from dawn to sunset, but also from anything that displeases Allah (Glory be to Him). The obligation of fasting in Islam came after the obligation of prayer, as the former became obligatory in the second year after Hijrah. While the month of Ramadan is regarded as the month of observing fasting, reciting the Glorious Qur’an, giving charity and many acts of worship, we must also keep in mind that it is a month of honor and pride for all Muslims as they managed to snatch great victories from the jaws of defeat.

     The first battle that took place during the month of Ramadan was the battle of Badr, referred to as Yaum al-Furqān (day when the true was distinguished from the false) in the Qur'an as Allah says, “…if you truly believe In Allah and in what We sent down on Our servant on the day when the true was distinguished from the false, the day on which the two armies met in battle. Allah has power over all things”.[1] This battle took place on the 17th of Ramadan, 2 A.H. It is worth mentioning here that the number of Muslim fighters during this battle was about three hundred while the number of the unbelievers was about one thousand. However, Muslims were sure that Allah would support them with such great victory as Allah says,
“We will, without doubt, help our messengers and those who believe, (both) in this world's life and on the Day when the Witnesses will stand forth”
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     Due to this great victory, Allah revealed a verse recited in the Glorious Quran till the day of judgment so that this battle remains deep engraved in the hearts of Muslims around the globe and throughout centuries, where Allah says, “Allah had helped you at Badr, when you were a contemptible little force; then fear Allah; thus may you show your gratitude”.[3]

     After the battle of Badr, the Muslim army was able to liberate Mecca on 20th of Ramadan 8 A.H. This liberation, known also as (the greatest conquest), marked the end of the wars between the followers of the Prophet and the tribe of Quraysh. This battle was a turning point in Muslim history as Muslim started to control over the Arabian Peninsula as a whole. When Prophet Muhammad (PBUH) went to Mecca, he performed circumambulation around the K‘aba (tawaaf) and started breaking down the pagans' idols rehearsing Allah's saying, “And say: "Truth has (now) arrived, and falsehood perished: for falsehood is (by its nature) bound to perish".[4]

     On 28th of Ramadan 92 A.H., the Muslim army led by Tariq ibn Ziyad and Mussa Ibn Nusair was able to conquer al-Andalus (Parts of the Iberian Peninsula ruled by Muslims), in the west, and another Muslim army reached China, in the east. The Islam remained in al-Andalus for more than eight centuries and this land was one of the most important crossing points between Islamic and European civilizations. The Islamic civilization in al-Andalus came to an end with the fall of the Emirate of Granada. 

     Afterwards, on the 9th of Ramadan 212 A.H., Muslims, led by Asad ibn al-Furat, who was also a jurist and theologian, conquered the Island of Sicily, which is regarded as the biggest island in the Mediterranean Sea. Muslims became only five miles away from Italy. Muslims ceaselessly continued their journey of preaching and spreading the message of Islam across the globe.
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     On Ramadan 223 A.H., the Abbasid campaign was led personally by the Caliph al-Mu‘tasim, when a Muslim woman appealed for help from him saying, “O Mu‘tasim, [Save me!]”.  Therefore, he targeted Amorium, a Byzantine city in western Asia Minor, because it was one of Byzantium's largest and most important cities. Amorium was strongly fortified but a traitor revealed a weak spot in the wall, where the Abbasids concentrated their attack, effecting a breach and soldiers surrendered.

     As for modern era, we find that the greatest war that occurred in Ramadan was the 6th of October War, 1973, which corresponds to the 10th of Ramadan 1393 A.H., where the Egyptian army forces crossed the Bar Lev Line and destroyed the Israeli defense points east of the Canal. After long negotiations, Egypt restored not only its entire land from the Israeli occupation, but its military prestige that it had lost after the defeat on the 5th of June 1967 as well. Therefore, there is no wonder if we said that fasting and the month of Ramadan are a source of inspiration, enthusiasm, and motivation to the Muslim soldiers, as this month witnessed many decisive battles that contributed greatly to Muslim achievements. We can also surely say that it is a month for hard work, great effort and endurance, not a month for laziness and sleeping.

Civilizational Aspect of the Islamic Shari’ah

     When the Almighty Allah created Adam, He made one of the duties assigned to him “the development of the earth.” This is clear from the statement of Allah to His Angels as the Qur’an reports, “[Remember] when your Lord said to the angels, ‘I am going to place a Khalifah (vicegerent) successive authority on earth” (Qur’an, 2: 30) Ibn ‘Ashour comments, “The word Khalifah in its figurative meaning refers to someone who shoulders a responsibility entrusted to him by a higher authority. So the meaning is, ‘We are creating an authority to act according to our Command.”[1]
Though we agree that the key purpose of creating man is to worship Allah as it is clear from Allah’s saying, “I created jinn and mankind only to worship Me,” (Qur’an, 51: 56), it cannot be neglected that the creation of Adam had another key purpose. The Almighty Allah said, “Worship Allah. You have no god other than Him. It was He Who brought you into being from the earth and assigned you to develop it.” (Qur’an, 11: 61) Thus, humans are created to achieve prosperity for this land, and this was why Allah taught Adam the names of everything.
In light of this idea, it is logical that the Qur’an criticizes the corruption caused in land by man as Allah says, “Corruption has appeared throughout the land and sea by [reason of] what the hands of people have earned.” (Qur’an, 30: 41) Al-Qurtubi comments, “Scholars differed in identifying the meanings of “corruption”. It is said that corruption refers to drought, scarcity of plants, and lack of blessing. It is also said that corruption refers to economic difficulties. Some said that corruption means sins, plundering and doing injustice.”
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However it might be more logical to widen the indication of the word corruption to cover all of its sorts, not the corruption referring only to sins and disobedience to Allah in its traditional religious meaning. Al-Miliji, comments, “The meaning of corruption in the Qur’anic usage is not confined to its common usage for disobedience according to Shari‘ah perspective, which includes drinking alcohol, adultery, stealing, bad behaviors, etc. In fact, the meaning presented in the Qur’an is much wider.”[2] Ibn Ashour states, “Corruption means the evil circumstances. Using the definite article Al (the) may indicate that it is a generic noun to cover all forms of corruption in land and sea.”[3]
Thus, it can be logically concluded that Islam aims at achieving the wellbeing of humanity or, in another words, to achieve civilization. This is the Islamic vision of the universe that seeks to worship Allah alone, promote morality and achieve ‘umran (development/prosperity) in the earth. This duty that Islam commands Muslims to carry out can only be achieved through presenting Islam in its complete and comprehensive meaning. It was the mission that Companions shouldered and could convey until the early Muslim generations were able to create civilization within a short period of time.
Thus, achieving human wellbeing is an objective of the Islamic Sharī‘ah, and as long as this is an objective of the Sharī‘ah, it must be presented and made clear in the Da‘wah discourse. This is the Jihad of our modern time. It is clear from the statements of the Prophet (PBUH) that Jihad can be undertaken through actions or statements as stated in the Hadith that reads, “Practice Jihad against the disbelievers with your hands, your properties and your tongues.”[4] Jihad with hands i.e. war has its conditions and circumstances.[5] However, the main means of conveying Islam is through speech as Allah said, “Call to the path of your Lord with wisdom and good admonition.” (Qur’an, 16: 125)
With this in mind, Muslims need to realize and understand the civilizational aspects of the religious teachings and rulings of Islam. Such wide approach in reading the texts of Islam guarantees presenting Islam in its comprehensive form and helps Muslims, and non-Muslims, to realize the civilizational dimension of Islam. The following are just examples of this attitude.
Preservation of the Environment
Ibn Majah and Ahmad reported that the Messenger of Allah (PBUH) passed by Sa‘d when the latter was performing ablution. He (PBUH) said, “What is this extravagance?” Sa‘d replied, “Can there be any extravagance in ablution?” the Messenger of Allah said: “Yes, even if you are on the bank of a flowing river.”[6] This Hadith is usually quoted to prove the prohibition of consuming extra water in making ablution. However, it must be understood from this Hadith that a Muslim should not be extravagant in using water for any purpose. This meaning also can be broadened to be applied to preserving all natural resources of the environment. Al-Najjar comments, “Water in this context is just an example for environmental resources in general. The consumption of these resources must be rationalized whether these resources are abundant or not and whether they are renewable or not.”[7]
Encouraging Development
The Muslim world suffers a state of backwardness, and it is necessary for the religious discourse to showcase how the Shari‘ah encourages and calls for development to prove that Islam came not only for calling people to perform spiritual acts of worship. Rather, true Islam achieves balance between the affairs of this world and the Hereafter. Many Ahadith may be used to encourage this value of development, while –apparently speaking- they could be used only for deducing fiqhi rulings.
Jabir ibn ‘Abd Allah narrated that the Prophet (PBUH) said, “Whoever revives a barren land, then it is for him.”[8] This Hadith has its fiqhi dimension, but it can also be understood as a call for encouraging development. This meaning is also supported by the Hadith narrated by Anas that the Prophet (PBUH) said, “If the Final Hour comes while you have a palm-cutting in your hands and it is possible to plant it before the Hour begins, you should plant it.”[9] Though the Hadith speaks about the end of this world life, it encourages Muslims to do whatever possible for them at this moment to develop the earth. Thus, development is meant for itself, not only for serving a coming generation.