DIGITAL TRANSFORMATION OF MUTUAL FUNDS: INTEGRATING TECHNOLOGY AND INVESTOR PSYCHOLOGY

Stock prices are widely recognized as being shaped not only by fundamental economic indicators but also by the psychological behavior of market participants. Optimism often drives prices upward, while pessimism triggers broad declines, suggesting that psychological influences frequently outweigh rational market forces. Previous studies (Ady et al., 2013; Ady, 2014, 2015, 2018a; Jannah & Ady, 2017; Ady & Hidayat, 2019; Ady, Mulyaningtyas, et al., 2020) have highlighted the significant role of behavioral factors in determining price movements. This reality became more evident during the COVID-19 pandemic (2020–2022), which brought unprecedented disruptions to the global economy, including Indonesia. The pandemic-induced economic slowdown, characterized by widespread layoffs and reduced household income, pushed many individuals toward online employment opportunities. Among these, online stock trading became a popular alternative. However, the fast-paced and highly uncertain environment of online trading encouraged impulsive decision-making, leading to frequent behavioral biases. Traders often succumbed to overconfidence, herd behavior, and loss aversion, which amplified irrational trading patterns and increased the likelihood of financial losses. This paper explores how the pandemic not only intensified financial vulnerability but also shaped investor psychology in online trading contexts. By analyzing the intersection of behavioral finance and crisis-driven market dynamics, this study provides insights into the ways psychological biases influence trading behavior, particularly under stressful economic conditions. The findings underscore the importance of integrating behavioral perspectives with traditional financial analysis to better understand market volatility and to design strategies that can mitigate irrational decision-making in times of crisis