Title: How to Avoid Emotional Investing
Headings: How to Avoid Emotional Investing
How to Avoid Emotional Investing
Key Takeaways
Performance Chasing Can Cost You
Investor Behavior
Bull vs. Bear Markets
Bad Timing
Time-Tested Theory
Strategies to Take the Emotion Out of Investing
$6.2 Trillion
Frequently Asked Questions
Why are emotions so important to market psychology?
How can one measure the level of fear or greed in the stock market?
What are some trading strategies to keep emotions in check?
The Bottom Line

Content: The key is to understand the motivations behind emotional investing and to avoid both euphoric and depressive investment traps that can lead to poor decision-making. Key Takeaways
Investing based on emotion (greed or fear) is the main reason why so many people are buying at market tops and selling at market bottoms. Underestimating risks associated with investments is one reason why investors sometimes make suboptimal decisions based on emotion. During periods of market volatility and rising interest rates, investors often move funds from riskier stocks and to lower-risk interest rate securities. Dollar-cost averaging and diversification are two approaches that investors can implement to make consistent decisions that are not driven by emotion. Staying the course through short-term volatility is often the key to longer-term success as an investor. 0:41
Performance Chasing Can Cost You
Investor Behavior
Investor behavior has been the focus of many studies and numerous theories attempt to explain the regret or overreaction that buyers and sellers often experience when it comes to money. The reality is that the investor's psyche can overpower rational thinking during times of stress, whether that stress is a result of euphoria or panic. Taking a rational and realistic approach to investing—during what seems like a short time frame for capitalizing on euphoria or fearful market developments—is essential. The non-professional investor is typically putting hard-earned cash in investments for the sake of receiving a return.