Today is the weekend, first of all, I wish everyone happiness, and then let's talk about a topic that friends in the community are all familiar with: greed and fear.
Human nature inherently contains these two basic emotions: fear and greed. Fear arises from unease about the unknown and instinctive resistance to loss, while greed stems from a desire for profit and an endless pursuit of satisfaction. In trading, these two emotions are amplified to the fullest.
Greed often manifests as:
Desire is limitless. Human nature is inherently greedy. When the market rises, the initial target might be a small profit and then exit, but as the market continues to heat up, desire expands instantly. Waiting a bit longer might double the profit, always thinking about extracting the last bit of profit from the market.
The gambler's fallacy. The excitement and pleasure brought by the rising market lead us to fantasize about accurately bottoming out and topping out, winning several times in a probability game, thus ignoring the risks.
Herd behavior. Blindly following trends. When the market rises collectively and everyone is celebrating, even rational and calm individuals blindly follow the trend. If everyone says a certain coin is about to soar, not buying feels like missing out on a fortune.
The temptation of the market. The market is filled with various wealth stories. Hearing about someone making a fortune in a bull market, suddenly becoming a life winner, or seeing profit screenshots shared in investment groups, showing returns that doubled in just a few days. All of these continuously stimulate our nerves.
Excessive confidence in one's own judgment often leads to a state of self-absorption during trading, where one believes their analysis and judgment are the most accurate, thinking that the coins they selected will definitely rise, especially when market trends align with their expectations, this confidence can turn into greed.
Fear often manifests as:
The potential loss of principal. Once the hard-earned money is invested in the trading market, it is like being placed in a turbulent sea, at any moment it could be swept away by huge waves. This fear of losing principal acts as a mental defense line deep within us, which can collapse instantly at the slightest market fluctuation.
Fear of uncertainty. The market is unpredictable and full of uncertainty. No matter how many charts and indicators we study, it is difficult to predict the next moment's market conditions with 100% certainty. This fear of the unknown makes us tread carefully in trading, fearing that one misstep could lead to irretrievable consequences.
Social comparison. The fear of being labeled as a 'bag holder' by others. Human nature is inherently comparative, and the cryptocurrency space magnifies this. In chat groups and forums, others flaunt their profits and skills, while one finds themselves mired in losses. This disparity can instantly shatter one's mental defenses. The anxiety and self-doubt that arise from such comparisons further exacerbate fear, making us hesitant in trading decisions.
How to cope with fear and greed?
Self-awareness is the starting point of personal growth. Understanding oneself is the first step to overcoming emotions. Clarify your risk tolerance, investment goals, and trading style. Don't blindly follow trends or overestimate your abilities. Just like climbing a mountain, knowing your physical strength, equipment, and target peak allows you to plan a reasonable route and avoid unnecessary risks, making trading decisions more grounded in reality.
Rational planning. Develop a detailed trading plan. To excel in your work, you must first sharpen your tools. Set stop-loss and take-profit points. When the market meets the preset conditions, execute decisively. Controlling risks is key to coping with greed. Do not blindly chase rising prices or sell at a loss. When the market is good, don't forget that risks are always present. Only invest a portion of your funds in each trade, keeping some in reserve.
Emotional awareness. Learn to recognize your emotional fluctuations. When fear and greed surface, identify and adjust promptly. For example, if you find yourself anxious due to market declines, stop, take a deep breath, meditate, and remind yourself of your plan's purpose.
Continuous learning. The market is constantly changing, and traders need to keep learning to improve their trading skills and knowledge. Understand the characteristics of different market phases and trading strategies, such as trend following and mean reversion. Enrich your toolbox and cultivate rational thinking to reduce fear of market uncertainty.
Accept imperfection. In trading, accept the possibility of losses. Understand that even with a rigorous strategy, market uncertainties can lead to failure. Do not demand perfection. Treat each trade as a life experience, learn from mistakes, continually improve, and face the imperfections in trading with composure to grow.
Let go of obsession and prejudice. One must let go of attachment and biases towards things, facing trading with an ordinary heart. Learn to let go of obsession with market trends and adapt to the market's rules. Do not attempt to go against market trends. Understand the market's operating rules and rhythms through observation and analysis, and do not overly rely on your own opinions and expectations.
Diversify investments. Do not think about putting all your funds into one coin. If that coin encounters problems, you are finished. Spread your funds across different coins; even if one coin drops, others can stabilize the situation.
Stay rational. Do not let the market lead you by the nose. Always remain calm while trading. Do not get so excited that you can't sleep when the market rises, nor should you panic like an ant on a hot pan when the market falls. Always remind yourself that the market has ups and downs; this is a normal pattern.
Buddhism believes that human suffering stems from limited self-awareness and misunderstanding of the essence of things. In trading, we often become too attached to our own views and expectations, believing the market should develop in the direction we envision. When market trends contradict our expectations, we experience fear and greed. This attachment and prejudice are due to our failure to see the market's essence, not recognizing that the market is a complex system made up of countless behaviors and factors, not something that can be controlled by individual will.
In a bull market, cultivate greed; in a bear market, cultivate fear.
— The market does not ferry people; only people can ferry themselves.
#交易心理 #恐惧与贪婪 #投资技巧 #投资感悟
