Share Market and Its Impact on Mental Health

Share Market and Its Impact on Mental Health

share market and mental health

The profession of trading in the stock market is unique and dynamic in and of itself. However, because it is so simple to enter the market and earn a lot of money quickly, non-professional people start doing this. Successful Share market traders choose the appropriate financial instrument or security to trade or invest in, then create and carry out a trading plan. The success rate is only partially achieved by doing this, though. The other aspect of success, which is regrettably largely disregarded, stems from behavioural and emotional equilibrium and control. Studies have previously demonstrated the links between people’s mental health and their emotions. Though stock market trading volumes are increasing in India, it is mostly due to institutional investors’ algorithmic trading than retail traders.

Share market as gambling

A common trait among traders is compulsive gambling or trading addiction, which is closely linked to speculative trading activity. Factors such as overconfidence, risk tolerance, financial literacy, and trading experience are not relevant to this addiction. (Kauwenberg, Kamolsareeratana, & Cox, 2019) Local laws and customs undoubtedly have an impact on gamblers’ actions in the financial markets. (Page, Spalt, and Kumar, 2011) Financial institutions use investor decision-making and demographic characteristics in their product design because of the close relationship between the two.

Share market as lottery

A trader lacking expertise willfully guesses without due diligence. When it comes to traditional gambling, such as the lottery, where irrational guesses frequently influence decisions, stock market trading may be second only to that. Research revealed a negative relationship between winning lottery prizes and retailer stock market trading. It becomes evident that some traders choose to play the lottery instead of the stock markets. (Dorn, Sengmueller, and Dorn, 2014) A trader must stay up to date on the constantly shifting laws and regulations governing the market. The Securities and Exchanges Board of India (SEBI), the market regulator, issues circulars nearly every day that are optimised.

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Impact on Lifestyle

After a daylight-saving weekend, there are significant negative market returns that are linked to sleep desynchronies. (Kramer, Levi, and Kamstra, 2000) A person’s attitudes and actions in their day-to-day financial dealings can disclose their level of financial literacy and the ensuing product needs. In 2009, Fünfgeld and Wang There is an indirect correlation between hospital admissions for psychological disorders like anxiety, panic disorder, or depression and daily stock market returns in (Engelberg and Parsons 2016 )work Both positive and negative effects on people’s mental health can be attributed to the stock market.

Impact on mental health

Stress and Anxiety
  • Stock prices: Sudden and quick changes in stock prices make investors feel more stressed and anxious. It has become very difficult to ignore the fear of losing money or leaving out the possible chance of financial gains.
  • Regular watching of financial news, leads to an increase in stress levels, because people suffer from fear of losing their jobs, experiencing unstable finances, or experiencing economic downfalls. This is mostly true during market downfalls or losses.
Rash and Excessive trading Behaviour
  • Loss Aversion: Because investors usually feel greater suffering from damage than joy from gains, they may act impulsively during market downturns to sell stocks in an effort to shield themselves from future losses.
  • Overtrading: Excessive buying and selling of stocks, driven more by intuition than by a well-thought-out strategy, can result in capital losses and increased anxiety.
  • Fear: Griffith, Najand, and Shen (2019) examined the measurement of small investor sentiment in the areas of stress, joy, fear, and gloom in order to forecast market volatility and returns. Market returns are significantly and persistently impacted by fear.
  • Emotionally imbalanced: An abrupt decline in the market causes traders to feel more depressed, which makes antidepressant medication necessary to alleviate these negative emotions. (Mellor, McInerney, and Nicholas, 2013) In online communication, emotions, not only influence traders’ decision-making but can also be used to predict their trading behaviour. Traders who exhibit a moderate level of emotional activation tend to be more profitable than those who display a high or low level of emotion.

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Impact on Self-Worth
  • Expected Success or Failure: People tend to equate their value with their financial achievements or shortcomings in the stock market. This can cause emotions based on transient market swings to feel either insufficient or accomplished.
  • Research indicates that contented investors exhibit optimism, and when they feel better overall, they anticipate greater market returns. (Levy, Veld, Veld-Merkoulova, & Kaplanski, 2013) Investing in stocks is a demanding career where the trader is frequently his own worst enemy.
  • Competition which starts from social media and heightened conversations amongst people about their investing successes leads to the rise in feelings of unworthiness or a desire to take unjustified risks in an effort to keep up with viewed peers.
Retirement and Long-Term Planning-Related Concerns
  • Nest Egg Reserving: Retirement savings may be impacted by stock market swings, which can be unsettling for those with significant equity investments. Concerns about not having enough money saved for retirement can lead to anxiety.
Sleep disturbances
  • Market Timings: Frequent stock traders may suffer from weariness and sleep disturbances due to the long hours required to monitor market movements, especially if they are day traders or reside in a different time zone.


  • Behavioural change: Some changes that affect decision-making include loss aversion and overconfidence. These changes also result in bad investment decisions and have negative effects on mental health.
  • (Lo, Steenbarger, & Repin, 2005) Behavioural and psychological biases are associated with overtrading. In 2018, Phan, Rieger, and Wang Some professional traders work for themselves through the stock market. Although self-employment is generally associated with greater job and life satisfaction, it may also increase the risk of mental health issues, even in those who do not view it as mentally taxing. (Alvarez, 2008)

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The Start of Negligent Behaviour
  • (McMullan, Corbet, & Larkin, 2020) Stress related to money and the economy may cause a loss of human capital in the form of suicide or murder-suicide. A two-year gap between a job loss and a human death could be used by policymakers to discourage traders from acting rashly.
  • (Mark and others, 2012) Single-day declines and the impact of multiple daily market drops are linked to an increase in the number of doctor visits for neurotic disorders.

When it comes to investing, it’s critical that people understand these possible effects and take action to take care of their mental health. This can entail making calculated financial goals, keeping a diversified portfolio, refraining from making snap judgements, and getting expert financial advice. Additionally, reducing stress and anxiety can be achieved by striking a balance between keeping up with market developments and limiting your exposure to financial news. Seeking professional mental health assistance is advised if mental health issues continue to cause concerns.

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