Different Emotions You Can Feel During Investing In The Stock Market
The share market relies on people with rational minds to enter into a trade to make profits and avoid losses, but most investors are not rational robots who always take a sound and efficient investment decision. Instead, the decisions that the investors make are mostly affected by their sentiments and emotions which forces them to incur massive losses while trading.
Trading psychology defines a specified range of emotions that an investor can go through while taking an investment decision. While it is the truth that we can never fully avoid our emotions while trading, knowing what can affect our decisions emotionally can go a long way to avoid losses and to become a rational and successful investor.
1. You get optimistic: This is the primary emotion an investor feels before even entering the share market. The will to make money and the optimism that the investor will not incur a loss encourages the investor to enter the market and buy stocks.
2. You get Excited: As your ideas and decisions start to prove profitable, you begin to get excited and start considering what your life would be if you make big in the share market. This allows you to get motivated to invest further in the market.
3. You get Thrilled: As your investments begin to prove successful you feel thrilled as you never imagined that you would make such good profits while trading. It is an emotion that will make you feel proud of yourself, and you will feel that your every decision from now on will be undoubtedly profitable.
4. You get Euphoric: This is the highest point of financial risk which an investor can achieve. As you have made quick and easy profits, you begin to feel like a financial wizard and start to ignore risk in your investment decisions. You expect that every trade you make from now will be profitable no matter what.
5. You get Anxious: This is the first time the market goes against you. Having made good profits until now, you feel agitated as you realize that you can also incur a loss. This emotion is that primary reason for an investor to identify himself as a long time investor and wait until the market goes up again in the future.
6. You go into Denial: Even after waiting for a long time, when the market has still not rebounded you begin to go in the denial phase that you have made poor choices and that it is the time to sell your stocks and incur a loss. At this time, you still think that the market will go your way and you will make profits on your investments.
7. You get afraid: You begin to worry as the market has still not risen and you know that there is no way that you are going to make profits on your investments now. This is the emotion that de-motivates most of the investors, and they think they should quit the market.
8. You get into desperation: You cannot believe that this is happening to you and you start to become desperate to seek any idea from anyone that would make you go profitable again so that you don't lose your money in the market.
9. You get Panicked: Having exhausted every idea, you are at a loss of what to do next. This is the emotion that forces the investor to question his/her's knowledge about the market and if he/she should have researched before investing.
10. You start to Capitulate: You understand at this point that you have made a bad investment decision and your portfolio will not increase again. This emotion enables the investor to consider selling the all the stocks to avoid further losses.
11. You become Despondent: Having incurred massive losses on your investments, you have decided to exit the market. You believe that you will never again buy stocks of any company. This emotion becomes the main reason for an investor to miss out on great financial opportunities as the investor is unwilling to trade irrespective of how good the opportunity is.
12. You get into Depression: When you realize that you passed on an opportunity that could have made you great profits, you feel depressed and ask yourself: How can I be so foolish? This emotion gives you the required motivation that the market is still profitable for the ones who are careful enough.
13. You become Hopeful: As the market returns to its former glory, you revert to the market in the hope of making profits once again. This is the emotion that makes the investor more careful and eventually leads to profits.
14. You get Relieved: Having made a profit once again, you feel relieved that you can still make profits in the market if you are careful enough. This emotion re-establishes the faith of an investor in trading and lead the investor to buy stocks once again.
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