New Study Reveals Key Factors Behind Financial Market States
Researchers used a computer model to understand how different types of traders affect financial markets. They found that when there are more traders who follow market trends, the market becomes unstable. But when there are more traders who focus on the true value of assets, the market stabilizes. The model showed that a balance of these two types of traders is needed for a healthy market. If there are too many trend-following traders, the market can collapse. This study helps us understand how real financial markets work and how they can become unstable.