Keep Emotions Under Check When Working In Stock Markets For Better Returns

Everybody must have read or at least heard about Emotional Intelligence. Why emotion forms very important aspect of life. But in stock markets those investors or traders who have control over their emotions and who have got certain amount of discipline are bound to perform better than those who go by their emotional reason for acting on stock markets. The reason for this is quiet simple as discussed below.

All the traders, investors, institutions, firms etc. combine together to form the complete stock market. So it acts in the direction of the majority behavior, i.e., the chief direction of the movement is determined by the emotion of the numerous people who are market participants. Now, the point to be noted is that to maximize returns and minimize losses one needs to think ahead or opposite to what the consensus thinks because that it might be the time for imminent reversal.

 But that thinking needs discipline, calculations, experience and proper planning. Here is how I go about taking my emotion under control (though not perfect, but

 improving):
1.        Meditation. Some or other form of meditation can be practiced by anyone who wants to improve his/ her control over emotions.
2.        Non market activity. One needs to have a sound activity outside of markets like playing, going out etc. which keeps him in proper perspective.
3.        Books. One of the most important allies in having a control over emotions. Reading books written by great authors keeps life’s perspectives in proper context and hence having better knowledge of one’s emotional reactions. Read Graham, Buffet, Bill Williams, Napoleon Hill, Tracy, Anthony Robbins etc.
4.        Family support. Absolutely essential in keeping emotions in check as the peace one receives from a good family helps one perform and react better.
5.        Discipline. Discipline in all walks of life is must for doing well in stock markets. I am still working on improving it gradually day by day.
6.        Strategy for various price levels. When market swings wildly the judgment tends to get clouded if no strategy has been decided beforehand. A predefined strategy certainly helps a great deal.

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