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Our study examines how emotions influence individual investors’ decision-making in stock markets, an area in which traditional quantitative approaches often fail to capture the complexity of the underlying mechanisms. To address this limitation, we adopt a qualitative, inductive approach that remains relatively uncommon in finance, combining a trading simulation with semi-structured interviews. Eight management science students participated in simulated trading sessions involving virtual capital and a competitive component designed to heighten emotional pressure. The interview data were analyzed through thematic coding and lexical analysis to identify recurring emotional patterns and their relationship with investment behavior. The findings reveal a three-part model in which emotions operate through three key functions. Cognitive framing captures how emotions shape the perception, interpretation, and selection of information, thereby influencing how investors mentally represent a decision situation. Positive emotions tend to support a more optimistic framing, whereas negative emotions may produce a more defensive or less structured perspective. Emotions also play a motivational role by activating or inhibiting behavior. Negative emotions may result in decision paralysis or disengagement, while frustration and determination can prompt renewed action. Participants also described strategies aimed at regulating impulsivity and supporting more deliberate decisions. Finally, post-decision evaluation reflects how emotions influence the interpretation and memory of previous choices and their incorporation into subsequent behavior. Emotional reactions to gains and losses therefore provide feedback that can reinforce, modify, or discourage future decisions. Overall, the proposed model highlights emotions as constitutive and adaptive components of investment decision-making rather than merely disruptive influences. By showing how emotions frame information, motivate action, and support post-decision learning, this study contributes to a more nuanced understanding of individual investor behavior under conditions of uncertainty.