The trading mentality is the key to whether the transaction can be effectively executed in the end. It can be said that all the efforts you make around the transaction ultimately need a good mentality to be implemented. Whether you can stop losses in time and allow profits to grow fully also depends on the mentality. Maintaining a good trading mentality is the goal that every investor strives for. If you have been easily emotionally excited during the recent sharp rises and falls, it may be that your trading mentality has a problem.
Prejudice is the driving force of the market's existence.
The market is not the real world; it is composed of the minds of all participants. The seemingly rational market is actually very irrational and full of prejudices. Investors enter the market with prejudices, and prejudices are the key to understanding the dynamics of the financial market. For example, when prejudices interact and influence each other in the investment community, they will produce a herd effect.
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So essentially, without the prejudices of investors, there would be no market. Prejudices are both the driving force and the foundation of the market's existence. In this way, we can easily understand that the market is a bet between the bullish and bearish crowds. No matter under what system, there must be a group of people who lose money if there are people who make a profit. Although we cannot predict the outcome, because the strength of both sides of the bull and bear often changes, not being able to predict does not mean that we cannot grasp the present, otherwise, we will not be able to trade rationally.
Subjective emotional disturbance is the root cause of loss.
To achieve rational trading, you need to step out of the circle and keep a distance from the bull and bear sides that are entangled in the circle. In this way, you can see which side is superior and follow the strong side to invest and make a profit.
In addition to patience, what investors need more in trading operations is the word "calmness". Calmness is also an emotion, but it is more a realm. The reason why most people cannot treat trading operations with calmness is that they cannot grasp the future trend of the trading target, that is, they cannot grasp the uncertainty of the future (risk), and thus produce subjective emotions such as fear, greed, and hope. Under the control and disturbance of these subjective emotions, the operation becomes unregulated, which is the most fundamental reason for the loss.
If you can grasp the future risks in trading operations, I believe most people will be able to operate calmly. For example, if someone guarantees to compensate for losses, I believe that person's trading operations will be more at ease and not so easily affected by subjective emotions.
Reduce position, overcome the mentality of worrying about gains and losses.
Many investors always worry about gains and losses in the specific trading process, which leads to the transaction not being carried out smoothly. In fact, one of the more important aspects of the emergence of this mentality is that the investor's position is too heavy. As a result, there is always a subconscious fear that once the operation is wrong, it will bring losses to oneself. If there is such a mentality of worrying about gains and losses, it means that investors can no longer stick to the trend to the end, so the wiser operation method at this time is "reduce position".First, level off half of the position, and the remaining cost will undoubtedly be lower. If we completely level off, since we cannot be sure whether the trading market will continue to rebound or rise, it is precisely because the market trend is unpredictable that the action of reducing positions is merely to optimize the trading cost and improve the trading mentality.
Learn to let profits fly for a while
Many investors always enter the market with an extreme mentality, always hoping that one or a few trades can make them rich and wealthy. Such a situation is almost impossible to exist. Because the market fluctuations are unlikely to allow investors to make large profits without losses, so profits cannot be rushed.
Let profits fly for a while - this is another key factor in making profits in trading. Only by making small losses and big gains can we make money. However, it should not be too absolute, even if we have made small losses, but have not made big gains, we are still at a loss. The continuation of the trend is definitely not smooth, it must be a wave-like continuation. Many investors are often shaken out by market fluctuations before the trend is completed.
Whether it is short-term or long-term, we should let the profitable orders stay longer as long as the trend has not changed or there is no significant reversal. Unless the trend changes, do not be affected by market fluctuations.
Pick up opportunities in the chaos
Soros said: Financial markets are inherently unstable, and international financial markets are even more so. International capital flows are all ups and downs, with both bulls and bears. Where the market is chaotic, there is money to be made. Identifying chaos, you may become rich; the more chaotic the situation, the more it is time for bold and careful investors to shine.
The worse a situation becomes, the higher it will bounce back. The deeper it falls, the more chaotic the market, the more likely there will be a big trend. Many situations often are: the market is chaotic, and investors are chaotic together. Therefore, we often see panic selling pressure, investors bravely chasing high and other news headlines.
For calm and objective investors, chaos is a gift from heaven, because this may be an opportunity to pick up cheap goods and a time for wealth redistribution.
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