Definition
When people follow what everyone else is doing in the market rather than their own analysis.
The story
Buying because everyone is buying can push prices far beyond what the news supports, and selling because everyone is selling can do the reverse. Herding can feed bubbles on the way up and panics on the way down.
Why markets watch it
It helps explain why markets sometimes overshoot in both directions.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms