What Makes Investors take Higher and Unnecessary Levels of RIsks?

I believe most investors at some point in their investing journey (I myself included, both as my current journey as an investor, and my earlier attempt at being a futures trader), took a position outside their methodology/system as well as quite likely outside their risk appetite.

In life, we engage in situations everyday where we have to assess and deal with the level of risk, such as crossing the street, taking that new role at work or making investment decisions. Our brains analyses the potential risk to reward tradeoff, but not always in the most rational manner.
There are instances where we would be prone to taking higher risks than necessary, and it is quite a killer in investing.

It is good to know that risk to reward evaluations take place on a psychological level and is a conflict between two parts in your brain, one part that processes memory, decision-making and emotions, and another part that processes your senses, conscious though, etc. So you're kinda like fighting within yourself all the time whether the risk you take is worth the reward or not.

I feel that it is important to understand their own set of emotions, both source and relevance of those feelings. It would help to prevent unnecessary trades and hopefully make better decisions.

Here are some examples of my own experience on how emotions affect our thoughts:

Boredom

How is boredom bad you ask? Boredom actually can lead to pulling a trigger either on a buy/sell on a stock or even compulsive trading "just to do something", because sitting there on cash isn't good use of it. 
Generally, this ends up being bad as entries are not carefully selected with thought. 
To make it worse, market nowadays are fast with sudden volatilities, sitting on our hands while waiting for the right opportunity is not an easy task. 
Steel yourself, remember sitting on your hands while waiting for the right opportunity is the one of the most important things investors and even traders should know.

FOMO

Yes, it is "Fear of Missing Out", brought by the advent of the internet and social media about friends spending loads of money traveling, eating, etc. It happens in investing too! 
There are times we are unsure of whether to buy in or not, and suddenly there's a strong breakout on that price charts of ours. 
It also happens when we are waiting for the price to be lower to hit our target price from a recent plunge. 
"WOW the price suddenly jumped back up!" you say.
You then silently curse yourself for waiting too long and being indecisive and quickly execute the buy order to jump in before it soars too much. 
It also happens during bull markets when the markets are in euphoria, where prices are surging out crazily into a bubble, and suddenly everyone close to you makes money in the stock market, you feel inclined to jump onto the bandwagon too. 
Generally, this is a bad move as it creates impulsive behavior which leads to increased risk and taking that stock pick that you think would be the "one" that will make you rich.

Stress

The stock market goes up and down, and sometimes extremely down as seen during bear markets. For those invested more than their own comfort will tend to get more stressful, as you see your portfolio dropping anywhere from 10-50% (it even happens for trading where I was down 40% in a trade, and on a losing streak, it was a hair pulling experience =\).
Checking prices every frequently (which could be an attempt to catch market tops and bottoms) also could result in stress as well, when it is actually noise.
And with too much stress, the brain stops working (I would say it for too little stress as well, but that's another topic) and investors would take more risk than they would normally have.

Social Peer Pressure

This is similar to FOMO, except on a more social aspect. You see these days we have stuff from investing news, analysts reports, all the way to forums as well as to investment bloggers posting on social media. 
Investors have to realise that generally these are opinions of someone else and may or may not be suitable for you (I am guilty of following the picks of a couple of bloggers in the past). It makes it even worse when the guy you are following may know even less than what you actually do yet you sorta hope that they do know a lot about that potential trade. 
As a general rule, acting on someone else's opinion has to be avoided in investing (that includes the entries and exits on my blog), instead you can generate ideas from their opinions and perform your due diligence to know whether this is right for you, especially in the risk aspect.


So after all of these, how can we avoid it?

Here's some of my suggestions:

• Keep a record of your trades, something like a trading journal for traders. It helps you keep track of your performance during different periods of the markets.
• Figure out how much risk you can take, aka your risk tolerance. the general rule of thumb would be to sell until you sleep peacefully at night. While rewards are important, no point risking everything if you're gonna end up blowing your account, and many of them may not even have a basis at all.
• Be more aware in your decision making, know why are you buying into this stock or why are you selling this stock? Is it out of greed and fear or is it rational. 
• Avoid checking prices too often, you can set alerts via your brokerages when a stock goes to your desired entry prices or even place it on queue nowadays, make use of it. Else just check every week or so.
• Put your energy into other meaningful activities while waiting, this can be reading up for future investing ideas (or even something not related to money), to exercising or even gaming to keep your bored mind occupied while waiting for that trade.
• Keep yourself healthy. Rest, exercise and a healthy diet, helps to keep you focused and refreshed.

So how do you manage your emotional risks?