Why do people buy high and sell low? Decoding investor psychology with the psychological line and Kioxia's stock price [n+Market]
When you are investing in stocks, strange things happen.
When stock prices are low, you are too afraid to buy.
However, once the stock price starts to rise, you suddenly want to buy.
And then, just when you finally buy, the stock price falls, and you get scared and sell.
Ideally, you should be “buying low and selling high.”
However, in reality, many investors end up doing the exact opposite.
Why is that?
I believe one of the major reasons for this lies in human “greed” and “fear.”
In this article, I would like to explain the “psychological line,” which allows you to read such investor psychology from stock price movements using numbers, in a way that is easy for beginners to understand.
We will also look at Kioxia (285A), which has seen significant stock price movement recently, as an example to consider how it could have been utilized in actual trading.
■ To begin with, stock prices are not determined solely by corporate performance
For example, suppose a company announces excellent financial results.
Sales increased by 20%.
Operating profit increased by 30%.
Normally, you would expect the stock price to rise.
However, what if market analysts were expecting a 40% increase in profit?
Even though profit actually increased by 30%, it means it fell short of expectations.
As a result, the stock price may fall.
Conversely, even if performance is poor, the stock price may rise if it is not as bad as the market expected.
In other words, it is not just the company’s performance that moves stock prices.
“What were investors expecting?” and “How did they perceive the results?”
This is extremely important.
And those expectations and anxieties are reflected in the daily movements of stock prices.
■ What is the psychological line?
Psychological means “related to the mind” in English.
The psychological line is a technical indicator that shows the percentage of days the stock price has risen over a certain period.
Generally, the most recent 12 trading days are used.
The calculation method is very simple.
Psychological line = Number of days risen ÷ 12 days × 100
For example, if it rose for 9 out of 12 trading days,
9 ÷ 12 × 100 = 75%
is the result.
Conversely, if it only rose for 3 out of 12 trading days,
3 ÷ 12 × 100 = 25%
is the result.
What is important here is that we are counting how many days it rose, not how many yen the stock price increased.
A 1 yen increase counts as 1 win.
A 1,000 yen increase also counts as 1 win.
In other words, it is an indicator to check whether the market’s price movement is biased toward rising or falling.
■ Is it time to sell if it’s 75% or higher, and buy if it’s 25% or lower?
Generally, it is used as a guideline in the following ways.
[How to read the psychological line]
・0-25%: A sign of being oversold. Look for the possibility of a rebound.
・25-50%: Leaning bearish. Confirm that the decline has stopped.
・Around 50%: Neutral. Observe the direction of the stock price.
・50-75%: Leaning bullish. Confirm the momentum of the rise.
・75-100%: A sign of being overbought. Be wary of signs of overheating.
However, you must not misunderstand this.
Just because it reaches 75% or higher does not mean the stock price will necessarily fall.
In a strong bull market, the stock price may continue to rise while staying above 80% or 90%.
Conversely, there are cases where the decline does not stop even after it falls below 25%.
In other words, the psychological line is not an indicator that predicts the future.
■ Why do people want to buy more when the stock price rises?
This is where investor psychology gets interesting.
For example, suppose a stock that was 1,000 yen rises to 1,500 yen.
At first, it was barely getting any attention.
However, as the stock price rises, it starts to be featured in news and on social media.
“This company seems amazing.”
“It seems it will continue to grow in the AI sector.”
“Won’t the stock price keep rising?”
As such information increases, those who haven’t bought yet start to feel anxious.
“Am I the only one missing out on the opportunity to make a profit?”
This is called FOMO (Fear of Missing Out).
It is the psychology of not wanting to miss out on an opportunity to make a profit.
The stock price rises.
It becomes a hot topic.
More people want to buy.
The stock price rises even further.
Such a cycle can sometimes emerge.
However, when the stock price rises significantly, investors who bought at an early stage may start to lock in their profits.
Then, sell orders may become more prevalent than buy orders.
When the stock price starts to fall, investors who bought at high prices become anxious.
“What should I do if it drops any further?”
And then, a situation where selling triggers more selling can occur.
Expectations are involved in stock price increases, while fear is involved in declines.
■ How do you use the psychological line for actual trading?
From here on, it’s the practical section.
There are three main ways to use it.
1. Aiming for a rebound from being oversold
For example, suppose the psychological line has dropped to 17%.
Out of 12 trading days, there were only 2 days of gains.
There are many days of decline in the market.
However, it is dangerous to buy immediately here.
You need to investigate why the stock price is falling.
Is the company’s performance deteriorating?
Are major shareholders selling?
Or is it just being caught up in a general market decline?
After confirming the cause, if the psychological line recovers to 25%, 33%, or 42%, consider the possibility of a rebound.
Furthermore, if you can confirm that the stock price has stopped falling and trading volume is increasing, you may consider purchasing a small amount.
② Buy after confirming the momentum of the rise
Conversely, this is the case when the psychological line is rising from 50% to 67% and 75%.
This means that the number of days with gains is increasing.
If the company’s earnings outlook is improving and trading volume is also increasing, a strong upward trend may have begun.
However, caution is required if the stock price has surged in a short period of time.
Instead of buying just because it is going up, you need to check the company’s growth potential and the position of the stock price.
③ Consider taking profits when the upward momentum weakens
For example, this is the case when the psychological line rises to 83% and then falls to 67% and 50%.
The proportion of days with gains is decreasing.
If the stock price is also falling here, the upward momentum may be weakening.
For investors who are already in profit, this becomes a factor to consider taking partial profits.
However, it is premature to sell just because the psychological line has declined.
This is because there are cases where the stock price continues to rise even while only the ratio of rising days decreases.
■ Case Study | How could the psychological line be used for Kioxia?
Here, we want to focus on Kioxia Holdings (285A).
Kioxia is a semiconductor company that handles products such as NAND flash memory.
The expansion of AI data centers, demand for SSDs, and improvements in the supply and demand of semiconductor memory lead to expectations for earnings.
However, growth expectations for a company and the actual stock price do not necessarily move in the same direction.
Recent Kioxia is an interesting case study for considering this.
Stock price in early October
The closing price on October 2 was 19,300 yen.
However, the closing price on October 9 was 17,505 yen.
It fell by approximately 9.3% in just 5 business days.
Even with growth expectations related to AI, the stock price does not necessarily continue to rise.
So, how was the psychological line moving at this time?
[Kioxia’s Stock Price and Psychological Line]
・October 2: 19,300 yen / 58.3%
・October 5: 19,120 yen / 58.3%
・October 6: 18,735 yen / 50.0%
・October 7: 17,900 yen / 41.7%
・October 8: 17,900 yen / 41.7%
・October 9: 17,505 yen / 41.7%
We can see something very important here.
In this case with Kioxia, the psychological line did not reach 75% or higher.
In other words, this was not a typical case of “selling because it is overbought.”
Rather, the point is that it dropped from 58.3% to 50% and then to 41.7%.
As the stock price fell, the percentage of days it rose also decreased.
We were able to confirm with numbers that the momentum of the stock price increase was weakening.
■ If you had been watching the psychological line, how could you have traded?
October 2.
The stock price was 19,300 yen.
The psychological line was 58.3%.
Since it was not 75% or higher, there was no clear signal to sell based on it being overbought.
It can be said that it was difficult to predict the peak at this point.
However, October 6.
The stock price fell to 18,735 yen.
The psychological line also dropped to 50%.
Here, we can confirm that the upward momentum is beginning to weaken.
For short-term investment, this became a factor to consider for taking profits, reducing holdings, or refraining from new purchases.
Furthermore, October 9.
The stock price was 17,505 yen.
The psychological line is at 41.7%.
It has not yet reached the oversold level of 25% or below.
In other words, it is not yet the stage to decide to buy because a rebound is coming based solely on this indicator.
At this point, we want to confirm whether the stock price stops falling, how the trading volume changes, and whether the number of rising days increases again.
■ How much difference would it have made if you held 100 shares?
Let’s assume you held 100 shares of Kioxia.
Let’s compare that to selling on October 9th.
If you had sold at 19,300 yen on October 2nd, you could have retained 179,500 yen more in capital.
If you had sold at 18,735 yen on October 6th, you could have retained 123,000 yen more in capital.
Of course, this is a comparison made after the results are known.
In reality, the subsequent decline was not guaranteed as of October 6th.
However, if you had checked the psychological line, you might have been able to grasp, at the very least, that the upward momentum was weakening through the numbers.
This is an important point we can learn from Kioxia this time.
The psychological line can be used not only to predict the peak, but also to confirm that the upward momentum is weakening.
■ So, what if you were to buy Kioxia from here on?
From here, let’s consider future trading decisions.
Using the October 9th closing price of 17,505 yen as a benchmark, for example, we look at whether the decline stops around 17,000 yen.
Whether it can recover to the 18,000 yen range.
Furthermore, whether it has the strength to return to the recent level of around 19,300 yen.
We will monitor these price levels.
However, these are observation levels set based on recent price movements and are not prices that will necessarily rebound.
Personally, I would not buy immediately just because the psychological line has dropped.
First, I confirm whether the stock price has stopped falling.
Then, I watch to see if the psychological line recovers to 50% or 58% again.
I also check whether trading volume is increasing and how supply and demand, such as margin buying balances, are changing.
Instead of buying just because it has become cheaper, I think about it only after confirming that selling has settled down and buying has returned.
This is the practical way of using it that I would like beginners to understand as well.
■ However, the psychological line has a major weakness
There is one more important thing here.
The psychological line only counts the number of days the stock price has risen.
For example, suppose a stock has risen by 10 yen every day for 11 consecutive days.
The total increase is 110 yen.
However, suppose it falls by 500 yen on just the last day.
In this case, the psychological line is 91.7%.
However, the actual stock price has fallen by 390 yen.
In other words, even if the psychological line exceeds 90%, the stock price as a whole may have fallen significantly.
That is precisely why it is important to combine it with other indicators.
For example,
・RSI: The momentum of price movement seen from the magnitude of gains and losses
・Moving average: The general direction of the stock price
・Trading Volume: How active the buying and selling is
・Margin Buying/Selling Balance: Supply and demand status of margin trading
・PER and Corporate Performance: Corporate earnings and stock valuation
By combining this information, you can judge stock prices from a more multifaceted perspective.
Beginners do not need to memorize everything from the start.
To begin with, just getting into the habit of looking at the psychological line, stock price charts, and trading volume together will increase the clues you have for understanding the market.
■ Usage differs between short-term and long-term investment
This is also extremely important.
The psychological line is an indicator mainly used to confirm short-term stock price biases.
In short-term investment, which utilizes price movements over several days to several weeks, it serves as material for considering trading timing.
However, in long-term investment, where you hold for 5, 10, or 20 years, it is important how much profit a company can generate in the future.
For example, suppose the stock price of a growing company rises and the psychological line reaches 90%.
Just because of that, there is no need to sell everything.
Conversely, even if the psychological line of a company that has lost its growth potential hits 10%, you should not buy it just because it is cheap.
Stock price momentum for short-term investment, and corporate growth potential for long-term investment.
The information you prioritize changes depending on your investment period.
■ N+ Market Summary | Know your own psychology before reading the market’s psychology
There is something we can learn from Kioxia this time.
The psychological line does not necessarily tell you the ceiling or bottom of a stock price.
In this instance as well, it was not possible to predict that the high of 19,300 yen on October 2nd would be the peak using this indicator alone.
However, the subsequent decline of the psychological line from 58.3% to 50% and then to 41.7% confirmed that the proportion of rising days was decreasing.
By combining this change with the decline in stock price, one could have considered the possibility that the short-term upward momentum was weakening.
And there is one more important thing.
The psychological line does not directly measure investor sentiment.
It is merely a numerical representation of stock price movements created by the trading behavior of investors.
Even if there are many rising days, not all investors are necessarily optimistic.
Stock prices can also rise due to short covering or mechanical buying linked to indices.
That is precisely why it is important to think about what is happening behind the numbers.
I believe that what is necessary to survive for a long time in stock investment is not the ability to perfectly predict tomorrow’s stock price.
Rather, it is acknowledging the possibility that your judgment might be wrong and being able to flexibly rethink things if the situation changes.
And it is about focusing not only on making profits but also on protecting your assets.
There are always new opportunities in the stock market.
Just because you didn’t buy today doesn’t mean you’ve lost all opportunities.
The desire to ‘make more money’.
The fear of ‘not wanting to lose money’.
Understanding these two emotions and dealing with them calmly.
Isn’t that the most important investment mindset that can be learned from the psychological line?
Finding a good company and buying its stock at a good price are two different things.
And,
analyzing your own psychology is just as important as analyzing stock prices.
n+ MARKET
Understand the market. Read the psychology. Think about the future.
*This article explains investment mechanisms and decision-making methods and does not recommend buying or selling any specific stock. The Kioxia case study is based on stock prices up to October 9, 2026. Investing carries the risk of loss of principal.