Understanding our emotions as the financial markets fluctuate. Crypto Currency & Stocks
Fluctuations in the financial markets cause a lot of emotions in investors who can put everything to waste if they act on impulse in the heat of the moment. Investing in stocks or crypto currency has a high risk, you need to study hard and prepare emotionally before you take action!
Emotional control in times of instability is key to maintaining your health and your money. Thinking about it, Mamãe
Crypto has prepared this article on the emotions that often accompany the variations of the financial market, so you prepare for them!
The Psychology of a Market Cycle
The Wall St. Cheat Sheet has released a chart, the ‘Psychology of a Market Cycle’, which shows the feelings that arise when the market fluctuates and the exact moment they appear in the life of the investor.
If time passes and the stock price is stable, you become disbelieving the value of your investment. The thoughts that accompany this emotion are negative, that it will not work, just as other previous investments did not.
After a while, just a small rise in prices that disbelief gives way to hope and you begin to believe that a recovery is possible!
Time goes by and stock prices keep rising. At that moment, you are taken by a wave of optimism and believe you made the right choice!
As the rise in prices continues, you become more and more believing and begin to think that it is time to come with everything and bet all the chips in that investment!
The price of your actions now reaches its peak and the state of euphoria takes care of your whole being! You feel like a genius and you’re sure to get rich!
After every peak, comes the descent, which leads to falling prices. At that moment, after the euphoria, you feel complacent with the situation, with a feeling that you just need to breathe a little and prepare for the next step.
The fall in prices persists with time and anxiety appears. You start to wonder why this is happening.
The next step is to deny reality, thinking that the situation will reverse, after all, your investments are with big companies and they will recover.
The fall in prices continues at full throttle and now you despair! Everyone is selling their stock and you need to take action right away and get out of that bored!
You feel totally out of the market and cannot afford to lose more money.
As time goes by and the situation does not change, depression can take over. You despaired because you lost all your money, maybe your entire retirement. And now?
12 Back to Disbeleif
Now you go back to the beginning where it all began. The price starts to rise, things get better and you, while still disbelieving, are about to revive all the emotions along with future fluctuations in the financial market!
So be aware of this vicious cycle of emotions and try to keep your balance, knowing that there are good and bad times. Calmness is important to make the right decisions at the right times, because even if it’s a high-risk market, it can be very lucrative!
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Editor / Psychologist: Adriana Prosdocimi