Investing in dangerous stocks or volatile encryption coins is not only a way for many people to pursue financial interests, but also a source of excitement. Unpredictable price fluctuations and the possibility of getting big or losing in a short time improves adrenaline. If you spend money on what you can’t control completely, your heart rate increases and your body makes dopamine. For example, this may also be when played in a casino roulette where the tension increases as the ball approaches the final destination. Dopamine explains why we like gambling so badly and perhaps we want to invest in danger.
Psychological mechanism
People are naturally sensitive to sudden wealth and success. The FOMO’s phenomenon of fear of missing plays an important role in this. If others get huge profits from certain currencies or sharing, you do not want to maintain an outsiders for him. The social pressure to participate in public investment is enormous and strengthened by news reports on those who have earned millions of dollars in social media and minimal investments. This creates an irrational boost. This is one of the reasons why influential people often use success stories to promote problems related to passwords.
In addition, another psychological mechanism, SO -Called Cognitive Disonance tends to adhere to loss -production investments. Nobody admits that the decision has turned wrong, so investors sometimes adhere to dangerous assets for a long time with the hope that the assistant will change from time to time. This psychological game between hope, anxiety and compensation makes it dangerous for fascinating and addictive investments. There is also SO -CALLED Sinking cost-Effect: They already have invested in money, so I think it’s no longer an option to give up. This can lead to irrational decisions that continue to invest in loss assets to restore initial losses. Knowledge of these psychological mechanisms is important because it can overcome psychological mechanisms. Comparison: Athletes should first know how muscle cramps work.
Physiology
Turning to financial risks leads to a similar response to physical stress. The production of cortisol, a stress hormone, increases as the price decreases and uncertainty increases. Then, a big victory releases the wave of endorphins and dopamine to ensure happiness. These substances can end up in a vicious cycle in which investors are always looking for a successful investment. This explains why some people do not benefit much, even if rational analysis is instructed differently, but again. This is also what a successful investor must know. He must remain reasonably in order not to lose such a substance.
danger
In addition to psychological and physiological factors, there is also a deeper human urge to tension and sensation. Of course, the possibility of financially independent with one movement appeals to imagination. In fact, it corresponds to the modern Gold Rush. I think it’s an opportunity to change anything somewhere. This prospect motivates investors to take risk even when they know the risk.
Finally, there is an important social aspect. People want to profile themselves as smart and forward investors. This creates an important form of competition not only for financial interests but also for social recognition. Our tip: Do not invest in finding social recognition, but in the context of a thorough investment strategy that builds a balanced investment portfolio.