Improve Your Trading With Emotional Intelligence

May 15, 2018 (6y ago)

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Note: This article is an excerpt from: Effects of a five-week e-learning intervention on emotional competence, Hövelborn, 2018

History of Emotional Intelligence

Aspects of what is now known as emotional intelligence (EI) were already described under the term social intelligence (SI) in 1920. At that time, Thorndike (1920) defined SI as the ability to understand others and to deal with them. He also showed that these abilities could be applied to oneself. The SI consisted of recognizing one's own and others' inner states, motives, and behaviors and acting optimally based on the available information.

These basic features of the understanding of SI were later put in a manipulative context. Weinstein (1969) saw SI as the ability to influence other people's responses. Previously, in 1960, Cronbach pointed out that the construct of SI, despite years of study, was undefined and unmeasurable, which led to a decline in scientific investigations. The statements made referred exclusively to an article by Thorndike and Stein (1937), which led to misunderstandings among researchers.

In another study (Sternberg, Conway, Ketron & Bernstein, 1981), people were asked to name attributes of intelligent people. Once again, socially relevant aspects emerged. Another study by Sternberg and Smith (1985) attempted to illustrate SI. In this case, photos were to be rated according to whether the people depicted were strangers or in a close relationship. In addition, Ford (1982) designed a form that asked about different aspects, such as determination and social attributes. It turned out that the components of SI could be distinguished from general academic abilities. In two further studies, Cantor and Kihlstrom emphasized the importance of SI to better understand the construct of personality (1985, 1987). In their view, problem-solving social aspects were a central personality process. The social adaptation of different characters was studied using students who moved from high school to college (Cantor, Norem, Niedenthal, Langston & Brower, 1987). In line with this, Epstein and Meier postulated that flexible and effective adaptation to the environment is a central component of personality (1989). Shortly thereafter, Salovey and Mayer (1990) used the term Emotional Intelligence for the first time. Their definition included three categories: appraising and expressing emotions, regulating emotions, and utilizing emotions for problem-solving.

The first category was further subdivided into verbal and nonverbal for the intrapersonal level, and nonverbal perception and empathy for the interpersonal level. The second category, regulating emotions, applies to the intra- and interpersonal level. The third category, utilizing emotions, includes components of flexible planning, creative thinking, attention, and motivation. In the book "Emotional Intelligence" by Goleman (1995), numerous relationships to emotional intelligence were presented and supplemented by special social and communicative skills. An updated model by Mayer and Salovey (1997) focused on the cognitive-emotional conditions and included four categories instead of the original three (1990) and added four phases to each, which become increasingly complex from one to four. Accordingly, the demands and components of higher phases can be associated with higher EI.

The Construct of Emotional Intelligence

With the increasing popularity of the topic, further research groups in the nineties tried to make the theoretical construct of emotional intelligence (EI) measurable (Bar-On, 1997; Mayer, Caruso & Salovey, 1999; Schutte et al., 1998; Tapia, 2001). However, the test constructions lacked a distinction between measurements of normal and maximum performance (Cronbach, 1984). Thus, measurements were based on self-assessment questionnaires (cf. Schutte et al., 1998) while other researchers provided test subjects with correct and incorrect questions (Mayer et al., 1999).

This fundamental difference explained the ambivalent results of various studies. This is better understandable when considering that self-assessment questionnaires query behavioral tendencies and subjectively perceived abilities, while maximum performance tests aim at actually retrievable abilities. To solve this problem, Petrides and Furnham (2000) suggested making a clear distinction in future measurements of the different constructs of emotional intelligence. They differentiated between trait EI and ability EI. Trait EI refers to the behaviors, subjectively perceived abilities, and is measured with self-assessment questionnaires. Ability EI refers to actual abilities and is tested with maximum tests rather than self-assessment questionnaires. Since intelligence and personality are independent domains (cf. Eysenck, 1994; McCrae, 1994; Zeidner, 1995), measurements of trait EI should be considered in the context of personality.

In contrast, ability EI should primarily be tested in the context of intelligence, although it also has an influence on personality (cf. Tellegen, 1985; Watson, 2000; Watson & Clark, 1997). To make this distinction regarding the test objectives and domains of EI even more precise, trait EI was also referred to as emotional self-efficacy and ability EI as cognitive-emotional ability (Petrides & Furnham, 2001). It is essential to understand that this primarily concerns not different theoretical domains, but the use and questioning of different measurement methods (Petrides & Furnham, 2003). Despite numerous studies, which largely focused on the easier to measure trait EI, different opinions and uncertainties regarding the definition of EI persisted. An updated model (Mikolajczak, Petrides, Kostantinos, Coumans & Luminet, 2009) postulated three levels and represents a mixed model: knowledge, abilities, and traits. The first level, knowledge, refers to the complexity and extent of knowledge about emotions. The focus is on what people know about emotions and how to deal with them in emotionally charged moments. Abilities describe whether people can apply the knowledge in emotional situations and set it up strategically.

This is crucial and easy to distinguish. For example, a soccer player knows that he should not question a wrong decision to avoid penalties. However, knowledge of a distraction strategy alone is not enough for him to apply it. The third level, traits, is in the context of the natural inclination of how an individual reacts in an emotionally charged situation. Thus, the soccer player has knowledge of the distraction strategy, the ability to implement it, but only rarely applies it due to personal traits. It is evident that this three-sided model is dynamic, and the different areas can influence and change each other. Nevertheless, knowledge does not automatically transfer into abilities, and abilities do not automatically transfer into practice or traits (Mikolajczak et al., 2009). Furthermore, there are only low correlations between the individual levels, which underscores a loose connection between the levels (Lumley, Gustavson, Partridge & Labouvie-Vief, 2005).

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