Emotional Intelligence: The Key to Successful Investing and Trading

"आप क्या खरीदते हैं यह मह्त्वपूर्ण नहीं है, मह्त्वपूर्ण यह है कि आप कितना जानते हैं। निवेश करना ख़रीदना नहीं होता, यह एक जानकारी है।" — रॉबर्ट टी. कियोसाकी

As Benjamin Graham said,
"Individuals who cannot master their emotions are ill-suited to profit from the investment process."
"जो व्यक्ति अपनी भावनाओं को नियंत्रित नहीं कर सकते हैं वे निवेश प्रक्रिया से लाभ के लिए उपयुक्त नहीं हैं।"
— बेंजामिन ग्राहम

In this article, we will develop an awareness of Emotional Intelligence by exploring:

1. What is Emotional Intelligence
   
2. Difference between Emotion and Intelligence
   
3. History of Emotional Intelligence
   
4. Salovey and Mayer's Model of Emotional Intelligence
   
5. Goleman’s 5-Step Model on Emotional Intelligence
   
6. Is Emotional Intelligence (EI) better than IQ?
   
7. Benefits and Drawbacks of Emotional Intelligence
   
8. Conclusion on Emotional Intelligence
   
9. Application of Emotional Intelligence in Trading and Investing
   
10. Steps to Develop Emotional Intelligence
    
    

1. What is Emotional Intelligence?

"तुम इतना जो मुस्कुरा रहे हो,

क्या ग़म है जिसको छुपा रहे हो?" — Album/Movie: अर्थ (1983)

Understanding the emotion behind the smile is essential.

Emotional Intelligence (EI) primarily involves understanding one’s own feelings as well as others’ feelings and the ability to regulate them.

There is no standardized process to calculate Emotional Intelligence.

EI is not uniform for everyone.

2. Relationship Between Emotion and Intelligence

Emotion: Intense feeling directed at someone or something.

Intelligence: A person's ability to think rationally, act purposefully, and deal effectively with their environment. Intelligence is limited by cognitive capacity, which involves memory, language, focus, knowledge, and problem-solving ability.

3. History of Emotional Intelligence

Historically, emotion and intelligence were viewed as negatively related or unrelated. The term "Emotional Intelligence" was coined in 1990 by Salovey and Mayer, who challenged the earlier notion. However, the concept has roots in ancient texts like the Gita and Greek philosophy, including Aristotle (biography).

4. Salovey and Mayer’s Model of Emotional Intelligence

4.1 Emotional Intelligence is defined as the ability to use emotional information to guide thinking and actions, identifying and differentiating feelings within oneself and others, thereby integrating emotion and intelligence.

4.2 The Four-Step Model (1997):

Perceiving Emotions: Identifying emotions in oneself or others.

Understanding Emotions: Comprehending emotional messages and their implications.

Facilitating Emotions: Using emotional information to direct creative thinking.

Managing Emotions: The capacity to transform negative emotions into positive ones.

"दुसरो को काबू करना ताकत है,
परन्तु खुद पर काबू करना असली ताकत है।"
— Lao Tzu

5. Goleman’s 5-Step Model of Emotional Intelligence (1999)

1. Self-Awareness: Ability to recognize one’s moods, emotions, and motivations as well as understand others’ feelings.  Qualities: Self-confidence, accuracy, introspection.
1. "दुसरो को जानना ज्ञान है,
2. खुद को जानना आत्मज्ञान।" — Lao Tzu
2. 
   
3. 2. Self-Regulation: Ability to control and redirect disruptive impulses and moods, fostering thoughtful decision-making. Qualities: Reliability, integrity, openness to change.

• “Only when you combine sound intellect with emotional discipline do you get rational behavior.” — Warren Buffett
  3. Self-Motivation: Working with passion for intrinsic reasons such as pleasure or desire to learn.
• Qualities: Optimism even after failure.
  "Invest in yourself before investing in the market or anywhere." — Robert T. Kiyosaki
  
  
1. Empathy: Ability to understand the emotional makeup of others, requiring three types:
   
• Cognitive empathy: Understanding others’ viewpoints.
  
• Emotional empathy: Feeling others’ emotions.
  
• Empathic concern: Understanding what others need.
  
2. Social Skill: Ability to manage relationships, build networks, and foster cooperation.
   

Goleman’s model extends Gardner’s theories on Interpersonal (understanding others) and Intrapersonal (self-understanding) intelligence.

6. Is EI Better Than IQ?

Over 80% of success in the workplace depends on Emotional Intelligence, while IQ contributes less than 20%. Many high-IQ individuals do not succeed, whereas most successful people possess high EI.

7. Qualities of a Person with High Emotional Intelligence

Integrity in action (consistency between thoughts and deeds)

Lower stress levels

Balance between personal and social life

Authenticity and legitimacy

Low tendency to repeat mistakes

Ability to benefit from criticism

Optimism, self-motivation, self-awareness, and self-regulation

Effective emotional management

Drawbacks:

• Can be used to manipulate others
  
• Ability to incite feelings
  
• Express emotions effectively

8. Conclusion on Emotional Intelligence

Ignoring the drawbacks, Emotional Intelligence offers tremendous benefits to individuals and fields like trading, investing, or any other life domain.

Krishna in the Gita explained:
Attachment leads to desire, and unfulfilled desire leads to anger, which causes confusion and ultimately leads to downfall. The Gita promotes emotional stability by highlighting detachment as the root to peace.

क्रोधाद्भवति संमोह: संमोहात्स्मृतिविभ्रम:।
स्मृतिभ्रंशाद्बुद्धिनाशो बुद्धिनाशात्प्रणश्यति॥
(द्वितीय अध्याय, श्लोक 63)

Anger clouds judgment, leading to confusion of memory and destruction of intellect, ultimately resulting in self-ruin.

Solution:
Detachment from the fruits of actions (karma) is the path to emotional stability. Performing one’s duties without attachment to results is the essence of Karma Yoga and the first step toward emotional intelligence.

कर्मण्येवाधिकारस्ते मा फलेषु कदाचन।
मा कर्मफलहेतुर्भूर्मा ते संगोऽस्त्वकर्मणि॥

9. Application of Emotional Intelligence in Trading and Investing

"Success in any endeavor is 80% psychology and 20% skill." — Unknown

While emotional discipline is often discussed in trading, few practice it. Fear and greed dominate market behavior; traders often try to control the market rather than their emotions.

Only about 2–5% of any trading strategy’s success is technical; 95% depends on understanding, regulating, and managing one’s own emotions.

Practice the three pillars:

Self-awareness: Understanding one’s own and the market’s fear and greed.

Self-regulation: Controlling impulses and moods to avoid impulsive trades.

Self-motivation: Maintaining internal passion and resilience, especially after losses.

Self-motivation techniques:

1 Positive self-talk in front of a mirror.

2 Writing down goals and intentions.

3 Periodic social detox.

4 Conversing with oneself for motivation.

Empathy helps learn from personal and others’ experiences.

10. Steps to Develop Emotional Intelligence

Gain awareness about Emotional Intelligence.

Learn physical and mental exercise techniques.

Regularly practice these techniques.

Physical exercises:  Yoga, gym, etc.

Mental exercises: Meditation, especially focusing on emotional understanding, regulation, and management rather than mere concentration.

Intelligence alone is insufficient; emotional discipline and Karma Yoga practice are essential for true emotional intelligence.

Regular practice is necessary—just like eating or changing clothes daily. Meditation and exercises should be ongoing for effective self-awareness, regulation, and management.

"There is nothing good or bad but thinking makes it so." — William Shakespeare

11. References

- Emotional Intelligence by Daniel Goleman

-Emotional Intelligence: Key Readings on the Mayer and Salovey Model

-Rich Dad Poor Dad by Robert T. Kiyosaki

-The Intelligent Investor by Benjamin Graham

-Attitude is Everything by Jeff Keller

-The 80/20 Rule by Richard Koch

-Quotes from Tao Te Ching by Lao Tzu

-The Power of Habit by Charles Duhigg

-The Power of the Subconscious Mind by Dr. Joseph Murphy

-Bhagavad Gita (Karma Yoga)

-Empathy and sympathy resources from Delhi IAS website

-Biographies and works of Aristotle, Carl Jung, Sigmund Freud

-Class notes from Master’s degree (MSW-102) on Psychology and Social Work

-Vipassana meditation resources: https://www.dhamma.org/en-US/index

Note: PDFs of these books are available upon request. This article is intended to raise awareness; to gain the full benefits mentioned, consistent practice of exercises is essential.

Thank you for reading this article. I hope it benefits everyone. Stay happy!

"They can because they think they can." — Virgil

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