Introduction
Fear
Fear is a negative emotion, and can lead to bad decisions. Fear can cause you to sell at the wrong time, buy at the wrong time or sell too early or buy too late.
Greed
Greed can lead to poor investment decisions.
Gaining more than you are willing and able to lose.
Taking on more risk than you are comfortable with.
Holding on to losing investments too long, thus increasing the amount of capital that is tied up in these assets and making them harder for you to sell or trade away at a later date (see: "Greater fool").
Impulsivity
Impulsivity is the tendency to act on a whim. Impulsivity can cause you to make rash decisions that lead to poor financial choices, poor relationship choices and poor health choices.
The best way to deal with impulsivity is through mindfulness training. Mindfulness training teaches you how your brain works so that when you're faced with difficult situations or emotions, you can use this knowledge in order to make better decisions instead of letting them drive your actions without thinking about them first.
Procrastination
Procrastination is one of the biggest obstacles to success in your business and personal life. It's a common problem that can lead to missed opportunities, stress, poor decision making and poor health.
If you have trouble getting started on something but then find yourself delaying action until it's too late to accomplish what you want or need to do—and then feel frustrated with yourself for not taking action sooner—you might be procrastinating at work.
In this article we'll look at some ways that managers can help their employees overcome procrastination by providing them with tools they'll find useful in achieving their goals more quickly:
Overconfidence
Overconfidence is the belief that you are better than you really are. It can lead to taking unnecessary risks, a lack of preparation and learning from mistakes.
It's also common for people with overconfidence to dismiss advice or suggestions from others because they're confident in their own abilities and don't need it.
Herd behavior
Herd behavior is a form of social proof. People will follow the same action or decision at the same time, even if it's irrational. A famous example of herd behavior can be found in the stock market: when everyone else is buying, you might be more likely to do so as well. This can cause people to react irrationally and make poor decisions based on other people's actions rather than their own personal assessment of risk or reward.
Herd behavior also occurs in our daily lives outside of investing; we conform because this makes us feel safe and secure—and if we don't conform then we'll be labeled as an outsider (or "different"). This can lead some people into terrible situations where they're forced out because they didn't follow along with what everyone else was doing!
Punishment vs. Reward
In the world of economics, punishment is a negative consequence for a behavior. It's when we get something that we don't want to happen. For example, if you owe someone money and they demand it back in full by tomorrow morning or else they'll report your debt to the credit bureau, then this would be considered a punishment.
On the other hand, reward is not only a positive consequence but also more effective than punishment in terms of motivating people to behave differently. A reward can take many forms: money (financial), praise/encouragement from others (social), or even recognition for doing well at school or work (intangible).
Emotions can affect stock market trading
Emotions can affect your stock trading in a variety of ways. You may feel angry or frustrated when a trade goes against you, or excited when it goes your way. These are normal emotions that we experience as humans and they're definitely part of why we trade the way we do.
However, emotions can also be detrimental to our performance on Wall Street because they distract us from focusing on technical analysis and other factors that will help us improve our returns in the long run. The best thing to do about this is to control them by learning how not only how but also why our emotions affect what we do with our money (and thus stock market trading).
Conclusion
The market has always been driven by emotion and while it can be a good thing, it can also cause problems. For example, investors with a tendency toward greed could fall prey to suspicious trading practices and scams in the market, which could result in losses for them. On the other hand, people who are overly fearful could be overexposed to news on their investments which could lead them to poor choices when buying or selling stocks at certain points during a given time period (i.e., bad timing).
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