You can only imagine the psychological effects a market bubble can have. Every time a buyer bids up an equity, the holder could be getting a jolt of dopamine in the head!

What investors need a strategy. A simple one we follow is the 200-day moving average (not herd mentality) to determine our market moves. If a position is below the 200-day average, it’s a signal to be out. If a position is above it, we are in. Of course, there are finer details that help us make decisions. (You can find some of them here: An ETF Trend Following Plan For All Seasons.) But simply put, using the 200-day moving average can help you mitigate the powerful impact emotions.

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Sumin Kim contributed to this article.