IDEAS home Printed from https://ideas.repec.org/h/spr/sprchp/978-981-95-0792-4_8.html
   My bibliography  Save this book chapter

Herding’s Hidden Risks and Rewards

In: Following the Crowd: Psychological Drivers of Herding and Market Overreaction

Author

Listed:
  • Kok Loang Ooi

    (Universiti Malaysia)

  • Norazlin Binti Ab Aziz

    (Universiti Malaysia)

  • Wee Yeap Lau

    (Universiti Malaysia)

Abstract

Herding behaviour in financial markets is a phenomenon that is both a source of instability and an opportunity for clever investors. In most cases, community investor decisions are the leading cause of speculative bubbles and sudden market crashes. However, contrarian investors are sufficiently skilled to identify this inefficiency and capitalise on it by recognising which assets are overvalued or undervalued. This chapter examines the herding dynamics observed in commodity and cryptocurrency markets, where speculation and crowd trading are the primary drivers of price movements. Bitcoin’s historical fluctuations are particularly notable, in addition to the herding risks associated with bulk buy strategies by investors, and contrasted with the potential wealth gains of those adeptly utilising this tool of speculation. The introduction of case studies in this chapter serves to illustrate the multifaceted relationship between collective behaviour and market efficiency, which has implications for both the risks and possibilities inherent in herding tactics.

Suggested Citation

  • Kok Loang Ooi & Norazlin Binti Ab Aziz & Wee Yeap Lau, 2025. "Herding’s Hidden Risks and Rewards," Springer Books, in: Following the Crowd: Psychological Drivers of Herding and Market Overreaction, chapter 0, pages 111-120, Springer.
    • Handle: RePEc:spr:sprchp:978-981-95-0792-4_8
    DOI: 10.1007/978-981-95-0792-4_8
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a
    for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sprchp:978-981-95-0792-4_8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.