The Psychology of Investing Money and 5 Negative Personality Traits

By Marcus De Maria

Investing in the stock market, in options, in foreign currency, in commodities, or in other financial instruments will only be successful if you do technical analysis and fundamental analysis and when you have a trading strategy that incorporates risk and portfolio management. To be successful in investing money, you must understand the psychology of investing. One aspect of this is to understand the negative personality traits that investors have - these traits prevent investors from succeeding in their investments.

Tape watchers

A tape watcher is a person who sits all day looking at live data. If you are a tape watcher, whenever the price of the stock you have invested in is up, you will think you have make a good investment, and vice versa. This makes tape watching an emotional experience. You should set your stop losses and you should take the time to do research or to do other constructive things.

The uncertain

Some people are always unsure about the decisions they make. This is a bad trait because they are not able to take risks and since the greater the risk the greater the reward, uncertain people will not succeed as investors. If you are not sure about your investment decision, you should do fundamental and technical analysis and then you should trust your intuition.

Roller coaster riders

Roller coaster riders are people who buy and sell when others are buying and selling. This is not prudent because sometimes the market is driven by external factors that are not related to the actual value of the stock they have invested in. You should be able to filter the noise and to make decisions based on sound judgment.

The backward thinkers

Some investors are backward thinkers. They do not use analysis tools such as trading calculators and volatility data and they do not have access to live data. Avoid being a backward thinker by taking courses on how to invest in whatever you are investing in.

The stupidity

Some people make very stupid investment decisions. These people buy a stock just for the sake of buying or for emotional reasons. They also buy without doing any analysis and they will sell when the prices are low and buy when they are high. Such an investor should find something else to do.

Marcus is dedicated to providing financial education that helps individuals create wealth for themselves and their families. Marcus is the author of the book, 'Wealth Workout - the Simple Seven Step Formula for Financial Success', and the contributor to various money, finance, stock market and property publications in UK.