The greatest investors have one skill that allows them to be profitable over the long term—strong emotional management.
Investing can be a rollercoaster of excitement, fear, greed, and more. And while emotions are a natural part of human behavior, they can be particularly challenging when investing. They lead to making bad decisions that harm the portfolio's performance.
Many people think that to become great investors, you need to master investment skills (TA, FA, etc.). While on a side is valid, they forget that financial markets are predominantly a mental game. Charts, if you think about it, represent humans' emotions.
Emotions Inject Stress
Besides increasing your risk of heart disease, depression, and other adverse effects, stress decreases cognitive performance. So are you saying that top investors are never stressed? Are they some terminators?
Of course not, but they became masters in managing stress and emotions through the use of different practices, both mental and physical. This ensures that their minds can sustain a long-term high performance, which, as you know, is the key to investment success.
Your performance goes down heavily if you are stressed or disturbed by a particular emotion. You will not be focused or subjected to making many mistakes.
So let us see how you can prevent stress and manage your emotions to perform better.
1. Positive Way of Thinking
Positive thoughts help focus your brain's attention on something with zero stress. This does not mean that you ignore life's less pleasant situations. Positive thinking means that you approach unpleasantness more constructively.
2. Disconnecting
Social media and technology have forged a dangerous circle where you think that you need to be available 24/7. From news, to what your friends do, to market updates, etc., This creates the assumptions of a high-stress level increase, decreasing productivity.
The content on your phone and checking it frequently can trigger a stress response, which releases cortisol into the body. Taking a break from the phone and the market reduces stress and increases future performance. Learn the art of disconnecting. It is crucial.
3. Work Out
This is an undervalued practice, but it is essential.
Training has many benefits: it helps physical improvement, releases dopamine, and reduces stress and anxiety.
4. Appreciate What you Have
"If only I had a higher-paying job, a bigger house, or a luxury vacation."
Many of us live in a perpetual desire to have more. While goals are correct, we should not focus on what we do not have but on what we have.
Being able to focus on what we have and be grateful for it injects positivity, which boosts our future goals. Focusing on what we do not have creates a death spiral of frustration and negativity, moving away from our targets.
5. Reframing Perspectives
Reframing perspectives involves changing how you view a situation or problem by looking at it from a different angle. This can help you see new opportunities or solutions that were previously hidden.
6. Rejecting Negativity
The more you grind on negative thoughts, the more power you give them. Most of our negative thoughts are just that: ideas, not facts. Our mind is programmed to amplify emotions.
Final Thoughts
All successful people have good habits, both physically and mentally. Taking care of their health increases their productivity which reflects on their business. Do everything in your possibilities to leverage your health.
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