Ever felt like you need to do something when the market moves?
The market falls 5%.
You start thinking:
“Should I sell?”
A stock you’re tracking jumps 10%.
“Should I buy now before it goes higher?”
Your portfolio hasn’t moved much for three months.
“Maybe I should change something.”
This is something called Action Bias, our natural tendency to feel that taking action is better than doing nothing.
And stock market investing is full of opportunities for it.
You buy a stock.
It falls 8%.
Instead of asking whether anything has fundamentally changed, you feel the urge to do something — sell it, average down, switch into another stock.
The market rallies.
Suddenly, you feel like you’re missing out and want to put more money to work.
The market goes sideways.
You start wondering whether your portfolio needs a complete overhaul.
The irony?
The market hasn’t necessarily given you new information.
But your brain is telling you that because something happened, you need to respond to it.
Now imagine having a predefined investment strategy.
You already know:
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What qualifies for your portfolio
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When to enter
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How much to allocate
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When to exit
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When to rebalance
A 5% market move doesn’t automatically become a reason to change your strategy.
The decision is based on the rules of the strategy, not the emotions of the investor.
And that’s one of the interesting applications of investing algos.
They don’t eliminate risk.
They don’t predict what the market will do tomorrow.
What they can do is help turn a discretionary investment process into a systematic one - where decisions are driven by predefined rules rather than the constant urge to react.
Because sometimes, the smartest thing an investor can do is nothing.
Think about the 2020 COVID crash.
The Nifty 50 fell from around 12,000 in February 2020 to below 8,000 within weeks.
For an investor watching their portfolio fall 30–40%, doing nothing would have felt almost impossible.
Selling felt like taking control.
But the investors who had a long-term framework and stayed invested eventually participated in the recovery that followed.
The lesson isn’t that you should always do nothing.
It’s that action itself isn’t a strategy.
A good investment process should tell you when to act, when to wait, and when the market’s movement isn’t enough reason to change your position.
And that’s where systematic investing becomes powerful.
Thoughts?