{"id":33770,"date":"2016-01-07T18:49:38","date_gmt":"2016-01-07T13:19:38","guid":{"rendered":"http:\/\/www.newsilike.in\/?p=33770"},"modified":"2019-05-21T12:01:26","modified_gmt":"2019-05-21T06:31:26","slug":"the-psychology-of-trading-the-stages-of-emotions-investors-experience","status":"publish","type":"post","link":"https:\/\/www.newsilike.in\/the-psychology-of-trading-the-stages-of-emotions-investors-experience\/","title":{"rendered":"The Psychology of Trading: The Stages of Emotions Investors Experience"},"content":{"rendered":"

Efficient markets, such as the BSE, are based on the idea the rational individuals will enter transaction with the intention of making maximal gains and minimal losses. This theory is great, but the truth is that most investors are not rational robots efficient markets should rely on. Instead, emotions tend to cloud decision-making<\/a> and prevent you from acting in a rational manner.<\/p>\n

Since it is next to impossible to conquer the inherent emotion bias of human beings, it is advisable to seek an understanding of the different emotions investors experience and how each affects the interactions with the market. In fact, emotion, not rational logic, determines the stock market, explains Psychology Today website. However, a common cycle of emotions exists and one that will shed light on how they evolve and affect your decisions. Once you understand these emotions, you are in a better position to tame the emotional roller coaster, possibly avoiding a myriad of related health<\/a> issues. The emotional stages are listed below.<\/p>\n

    \n
  1. Optimism<\/strong> \u2013 At this stage, you have a positive outlook that tells you everything will be ok, this leads you to buying stocks.<\/li>\n
  2. Excitement<\/strong> \u2013 Once some of your initial ideas seem to be working, you begin thinking about what you would accomplish considering your recent market success.<\/li>\n
  3. The Thrill<\/strong> \u2013 At this stage, you are literary walking on air since you cannot believe your success and even start commenting on how smart you were in getting in a few successful trades.<\/li>\n
  4. Euphoria<\/strong> \u2013 This is the beginning of making maximum financial risk. Your past investment decisions have been resulting in quick, easy profits, you start ignoring the fact that there is a risk element involved and expect every trade to give you a profit.<\/li>\n
  5. Anxiety<\/strong> \u2013 For the first time since you started trading, the market suddenly moves, but against you. Since you have never been in such a position, you tell yourself that you are a long-term investor and that all your investment ideas eventually work, at some point.<\/li>\n
  6. Denial<\/strong> \u2013 As the markets have not yet rebounded, you have no clue how you should respond and you begin denying that you may have made a poor decision or that things are not likely to improve any time soon.<\/li>\n
  7. Fear<\/strong> \u2013 The realities of the market suddenly dawn on you and everything is confusing. You start believing that the stocks you own will never move in your favor.<\/li>\n
  8. Desperation<\/strong> \u2013 You have no idea how to respond, you are now susceptible to grasping at any idea that offers you an easy way to breakeven point.<\/li>\n
  9. Panic<\/strong> \u2013 You have exhausted all your ideas and at a loss of what your next move should be.<\/li>\n
  10. Capitulation<\/strong> \u2013 You decide that your portfolio will never increase at any point in future and sell all your stock options to reduce your losses.<\/li>\n
  11. Despondency<\/strong> \u2013 Once you exit the stock market, you do not want anything to do with buying stocks ever again\u2026but what you don\u2019t know is that this is the moment of the greatest financial opportunity.<\/li>\n
  12. Depression<\/strong> \u2013 You do not understand how you could have been fooled by the market as you try to figure out what just happened.<\/li>\n
  13. Hope<\/strong> \u2013 In the course of studying the market, you realize that it moves in cycles and you start looking for the next opportunity.<\/li>\n
  14. Relief<\/strong> \u2013 Once you buy stock that turns profitable, your faith is renewed in the future of investing.<\/li>\n<\/ol>\n

    Stock market live<\/strong> data from websites such as Money Bhaskar<\/strong><\/a> can help you make your investment decision much easier.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Efficient markets, such as the BSE, are based on the idea the rational individuals will enter transaction with the intention of making maximal gains and minimal losses. This theory is great, but the truth is that most investors are not rational robots efficient markets should rely on. Instead, emotions tend to cloud decision-making and prevent…<\/p>\n Read More<\/span> The Psychology of Trading: The Stages of Emotions Investors Experience<\/span><\/a>","protected":false},"author":2,"featured_media":33772,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"Layout":"","_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[1745],"tags":[],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.newsilike.in\/wp-content\/uploads\/2016\/01\/trading.jpg","_links":{"self":[{"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/posts\/33770"}],"collection":[{"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/comments?post=33770"}],"version-history":[{"count":0,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/posts\/33770\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/media\/33772"}],"wp:attachment":[{"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/media?parent=33770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/categories?post=33770"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsilike.in\/wp-json\/wp\/v2\/tags?post=33770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}