Behavioral finance attempts to explain how decision-makers take financial decisions in real life, and why their decisions might not appear to be rational every time and, therefore, have unpredictable consequences.

Here are a few exercises that can help control financial emotion:

Track your emotions: Keep a journal of your emotions before and after making financial decisions. This can help you identify patterns and triggers that lead to certain behaviors.
Set realistic goals: Set realistic financial goals and break them down into achievable steps. This can help you avoid feeling overwhelmed or anxious about your finances.
Take a break: If you find yourself becoming too emotional or stressed about your finances, take a break and step away from the situation. This can help you clear your head and make better decisions in the long run.

Behavioral finance suggests that people do not always behave rationally when making financial decisions, and that this can lead to unpredictable outcomes. Understanding behavioral finance can help investors make better decisions by anticipating and mitigating common biases and errors.

One of the key insights of behavioral finance is that humans tend to make decisions based on emotions as well as logic, which can lead to biases and errors.

For example, people tend to be overconfident in their abilities, which can lead them to take on too much risk or invest in assets that they do not fully understand. Another common bias is the tendency to follow the crowd, which can lead to herd behavior and bubbles in financial markets.

By understanding these biases and other tendencies, investors can make better decisions about how to allocate their assets and manage their portfolios.

For example, they can use diversification and rebalancing strategies to reduce risk and avoid overconfidence. They can also use tools like stop-loss orders and limit orders to protect themselves from sudden market swings.

How to control emotion

One way to control behavioral finance is to be aware of the various biases and tendencies that can impact decision-making. This can involve educating oneself about the different types of biases, and being vigilant about one's own decision-making processes. Additionally, investors can use tools like diversification, rebalancing, and stop-loss orders to help manage risk and avoid making impulsive decisions based on emotions or market trends. Finally, seeking out the advice and guidance of a professional financial advisor can also be helpful in managing behavioural finance and making better financial decisions.

Emotional Trading

**https://capital.com/emotions-in-trading**

**https://www.investopedia.com/articles/trading/02/110502.asp**