Phenomenological Exploration of Emotional Experiences of Retail Investors During Digital Market Crashes
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Abstract
The rapid digitalization of financial markets has transformed retail investing into a real-time, emotionally charged activity shaped by technology-driven interfaces. While behavioral finance has identified the influence of emotion on investor behavior, it has largely neglected the lived emotional experiences of retail investors during extreme market volatility. Despite growing interest, little is known about how individual investors make sense of fear, uncertainty, and decision-making in the midst of a digital market crash. This study uses an interpretative phenomenological approach to explore the emotional experiences of retail investors and how these emotions influence investment behavior during financial crises. Semi-structured interviews were conducted with twelve retail investors actively involved in digital trading during a recent market crash, and data were analyzed using Interpretative Phenomenological Analysis (IPA). Findings revealed four key themes: overwhelming fear, loss of perceived control, panic selling as emotional relief, and information overload in digital trading environments. These themes illustrate that emotional states, rather than rational strategies, often govern investor decisions during periods of instability. By explicitly identifying these emotional themes, the study highlights how fear and uncertainty manifest in concrete behaviors, reinforcing the central role of emotions in shaping financial decisions. The results underscore the need for a more human-centered understanding of investor behavior and call for financial platforms to integrate emotional awareness into their design. These insights contribute to both theory and practice by highlighting the importance of subjective experiences in shaping financial decision-making and suggest new directions for research on emotional resilience in digital investing.
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