Profit-Killer Emotions in Stock Investing

Profit-Killer Emotions in Stock Investing

In the entire process of investing, emotions play a very crucial role in determining the success or failure of a portfolio. Human beings are emotional, easily influenced and often tend to let emotions get the better of them. But, when it comes to stock investing, that might just be one of the biggest mistakes we make. Emotions kill profits. They also lead to missed opportunities, bad choices, and stunning losses.

Trading like a robot has been proven to result in a better stock investment. Unfortunately for us, we aren’t robots, and our feelings often get in the way, whether we realize it or not. Here are some of the profit-killer emotions that investors should avoid.

See Also: Risks in Stock Investment

  1. Impatience

When investors deal with high-flying, volatile penny stocks, which often can move significantly within short time periods, it is common to fall into the impatience trap.

This emotion can lead to selling shares far too early, even when they become a massive company just a few months or years down the road.  At the same time, impatience is often why an investor will take the first profit they see, cashing in on a rise while the shares are just beginning on their journey to double or triple in price.

  1. Greed

Investors know they have a little greed in them and basically, all humans do. This is why once we achieve the gain we wanted in the first place, we start looking for even more.  If we get more, our greed level increases, and then we set our sights on the next higher level. Greed is not a reflection of what you want, it is a reflection of more than whatever level you have achieved.

  1. Frustration

Investors will be able to notice impatience and greed much more easily than frustration. As stock market emotions go, this is the silent killer.  It manifests as sudden impulses and trading decisions which won’t seem like such a good idea in a few hours when you’ve calmed down. Frustration is just another shade of Ego, which will compromise your life just as much as your stock investment returns and wise trading choices.

  1. Stress

If investors are stressing over their stock, then they shouldn’t be in that investment. While the toll stress will take on their health and attitude, it will also invite the other negative emotions that kill success in stock investment.

Besides avoiding stressful situations, the way to eliminate stress is to notice it. Observe that you are feeling it, and think about the reasons which are fueling the emotion. Ask yourself if you would make the exact same stock market trade if you were not feeling the stress.

  1. Regret

We all make mistakes in stock investment, especially in penny stocks, these errors can be sudden and extreme.  Regret is simply a need to hold on to the mistake and drag it through life with you. With this, we are identifying with the bad investment move, rather than looking for the good which may come from it.

  1. Stubbornness

Believing in yourself is one thing, but stubbornness rarely pays off in the world of stock investing. In fact, stubbornness often inspires investors to purchase a stock that isn’t ideal or stay with a stock that has already shown signs of dropping.

  1. Fear

A single emotion that is enough to kill successful stock investing even before it starts. Fear plays a huge role in emotional investing and it is probably the most detrimental emotion. If there is one thing we know about the market, it is that we cannot get returns without taking a risk and the fear of taking risk is something that kills successful stock investing.

  1. Anger

Anger can sometimes push investors to make unhealthy investment decisions. And in a bid to recover losses as a result of the bad decision, they may commit a series of investment errors.

Conclusion

The best way to protect yourself from these killer emotions, and the chaos which they will create, is to notice them when you feel them. This instantly gets rid of their effects. Also, develop a plan and trading strategy. Create and refine rules which work for your investments. Be emotionless and act like a robot in stock investment trading.

See Also: Presenting the Stages of Investor Emotions from a Trading Loss

If you want to learn new things and learn strategies about the market, BWorldpedia is the site you should visit! We provide profound and useful insights about the market and across a plethora of topics related to it.

5 Replies to “Profit-Killer Emotions in Stock Investing”

Leave a Reply