How emotions affect investing
In this article we will talk to you about how emotions affect investing and what their consequences can be.
Each and every one of us should study and strengthen our emotional intelligence, since it is what makes us make decisions and know ourselves better, feeling our emotions.
There are some definitions by some authors that will help us know what emotional intelligence is:
“It refers to the set of personal management skills and social skills that allow us to succeed in the workplace and in life in general” Emily Sterrett.
“It is the ability to recognize one’s own and other people’s feelings and the ability to manage them” Daniel Goleman.
“A subset of social intelligence that includes the ability to monitor one’s own feelings and emotions, as well as those of others, to discriminate between them, and to use this information to guide our thoughts and actions” Peter Salovey and John Mayer.
What is an emotion?
An emotion is defined as the impulse that leads to action and according to several authors there are several basic emotions, also called primary emotions.
It is said that they are basic emotions because we have them as soon as we are born, such as fear, joy, sadness, disgust, anger and surprise.
Well, all these emotions and many more are the ones that will come into play during our lives, in everything we do and all the decisions we make, such as an investment.
That is why a person who decides to invest in cryptocurrencies not only has the market in mind, but also some emotions that will make them make good or bad decisions.
Now we will see how our emotions affect investing!!!
Our emotions influence the way we process information, which can cause this information to be altered and take us down the wrong path.
One of the emotions that most accompanies us in our lives and especially in the world of investments is fear.
How does fear affect investing?
This emotion can make us make the decision to sell our assets in a bear market, or when there is a sharp specific drop in the market. In some cases, these investors who are caught by fear, panic when they hear in some media or in some forums, negative comments about the cryptocurrency they have in their portfolio, so they may perceive the risk as higher than expected. which it really is.
These people can also act as others act, if several people panic, they also feel that panic, what is called “the herd effect”, they tend to do what others do.
How does euphoria affect investment?
Another emotion that usually plays tricks is euphoria, since we will enter a state of excessive excitement caused by certain events in which we may irrationally feel excessively confident.
This emotion usually appears when the market is in its rising phase, or when they have given good news about a project and we decide to invest, or when we have made a good investment and have earned a lot of money.
In the latter case, there are people who feel at that moment that the market will never go down and invest the money they have earned and even more, thus making impulsive and irrational purchases.
That is when the market can turn around and lose everything invested, taking us to another completely opposite and different emotional state, such as the emotion of anger at that moment, because we will feel rage and helplessness while we think about what is happening.
Then will come despair and disbelief, because we do not believe what we have experienced and what has happened.
Finally, this will cause the emotion of fear to enter again in our next investments, since we have had a bad experience that will affect us in subsequent investment decisions.
That is why at N&P we have prepared several tools in which you can research your projects and invest in the purchase of narratives, this being another plus of security in your investment and decision making.
Recommendations:
Before starting in the world of investment and delving into cryptocurrencies, it is always advisable to carry out studies that make us have more knowledge about topics related to the blockchain, web 3 and how to study those projects in which we are going to invest. .
For this we recommend a company like Bitlab, where you can train and learn about these topics.
This has been a little help for you to know how emotions affect investing.
If you want to know about narratives and project research you can visit our website.
