How Music Affects the Stock Market
Can you imagine that music influences the stock market? That sounds weird because we think things like election outcomes, the weather, economy and other similar factors affect the stock market. The truth is, even your thoughts, feelings, and music could influence the stock returns.
There are several research papers proving these theories. In a research published on Harvard Business Review, listening to happy songs makes the stock market outperform. The review by Alex Edmans of London Business School alongside other three coauthors is based on 40 nations that listen music on Spotify. The researchers found that listening to positive music during the time of carrying the research reflected on the stock market of an individual country. Ideally, Edmans and coauthors found listening to good vibe music promoted the stock returns.
Let`s look at some of the ways music affects the stock market.
Music Helps You Focus
Many corporate offices have televisions at every corner. However, if you think about it, you would hardly concentrate on your work and still watch your favorite show or watch music video.
But, if you replaced television with speakers, the outcome will likely be better. Various studies show that music increases the level of dopamine. The increase of this hormone is likely to promote your productivity.
Considering that stock market involves a lot of analysis, calculations, repetitious tasks, reading reports, and data interpretation, you need something to help you focus. Fortunately, various researchers have proven that music can help you focus. Ultimately, you will get better interpretations and make better decisions about buying and selling stocks.
Music Block the Outside Noise
Reading the last five words can make you question a lot of things, but give it a second. It feels like music is noise in itself. But look at it this way.
Imagine you are in a room with big computers whose fans make loud noise. Apart from that, you will hear laughs from time to time and other noises. However, listening to music blocks out all the other noise.
In other words, you can listen to music passively. When you choose the right music and put it in a low volume, it does the trick.
Music Lighten Up Your Moods
You might be a good trader. However, you will always have bad days where you make bad losses. Without music, you can concentrate on your bad moods all day. However, putting on the right music can help you move on.
Ideally, music can help you stop focusing on the loss and concentrate on the mistakes you did and learn your lessons.
Music Can Make You More Cautious
You are bound to make mistakes especially after a long day at work. However, listening to music can make you more cautious. This is because your brain registers that it is doing multiple jobs including listening to the music and trading. Therefore, it will try and focus more on individual activity during the multitasking period.
So, if you find yourself making mistakes, you can turn on the music to turn things around.
Music Can Keep You Interested
Looking at graphs and other data all the time is not interesting. You will get tired and walk away from your desk from time to time. However, when you put music on, you are likely to stay on your desk longer to prevent missing a beat.
Can You Listen To Any Music During Stock Trading?
Probably not. Not every tune can keep you interested, focused, and calm. Experts advise you stick to positive music. Consider your favorite music and new positive tunes to create your playlist.
Particular attention to the choice of music should be taken into account when margin trading. Take Contract for Differences (or CFDs) as an example, it is a good derivative that makes it possible to make high profits for both rising and falling market prices. However, if you are distracted by music, you can skip important pieces of information and misallocate your trading funds. And everyones knows that trading with leverage does not tolerate such mistakes.
If you are listening to music as a group, you need to consider other people`s interests too, otherwise, your choice will be their destruction. You can even go for instrumentals. This works really great because you don’t have to focus on listening or learning new lyrics. Instead, you can focus on your work.
Listening to music is not the sole strategy to make good returns from stocks. Therefore, you cannot rely on listening to good music to get profits. Instead, listening to music should be one of the many things you do as a trader to increase your returns from stock trading.