Because traders face two insurmountable mountains!
Trading psychological traps:
A. Conservatism during profits: Traders tend to take profits during winning trades, avoiding risks and uncertainties, which leads to missed opportunities for greater profits.
B. Risk-taking during losses: When losses occur, traders often tend to take reckless risks, hoping that risk-taking can avoid certain losses. This 'throwing caution to the wind' mentality often exacerbates losses.
C. Overconfidence: Traders often believe their analysis and expectations are entirely rational, attributing random successes to their own abilities while blaming external factors for failures. This overconfidence prevents them from accurately understanding market conditions, leading to poor decision-making.
D. Overreaction: Traders' expectations often deviate too far from real value; they may believe that if prices drop, they will drop further, and if they rise, they will rise further, ignoring gradually emerging risks. This overreaction makes it difficult for them to remain calm and rational.
E. Fear of losing control: Traders enjoy a sense of control, so they tend to exit at the first sign of a downturn and enter at the slightest positive indication. Frequent trading leads to an inability to hold good positions for the long term.
F. Regret: Traders often believe that their planned trades are the best ones and regret not executing them. This regret affects their decision-making efficiency and execution ability.
G. Insufficient greed: Traders often become insufficiently greedy when they are profitable, believing they have a clear view and wanting to double their gains or see further. This greed makes it difficult for them to control risk.
H. Jealousy: Seeing others make money while they do not, traders may act impulsively, as if they have lost money themselves. This jealousy disrupts their normal judgment.
I. Excessive hope: Traders always wish for prices to rise immediately after buying and to fall after selling, unwilling to wait for market opportunities. This excessive hope makes it hard for them to maintain patience and discipline.
J. Despairing emotions: When trading does not go well consecutively, traders may feel their trading system is inadequate, and that they themselves are incapable, leading them to consider giving up or changing strategies. Overcoming these psychological issues requires real trading experience and financial resilience, but there are ways to minimize these costs.
Trading technical challenges:
Trading skills include both technical and fundamental aspects. Fundamental research requires an understanding of supply and demand, necessitating traders to discern true and effective information from a plethora of news, along with industry background and field investigation experience. This poses a significant challenge for most traders.
The technical aspect includes various factions such as indicators, patterns, naked candlestick, wave theory, and volume-price momentum. My view on trading skills is 'to learn is to gain, to act is to lose.' All indicators and patterns appear only after prices have formed; they are merely historical representations that will repeat but not completely replicate. Therefore, traders do not need to learn too many technical tools; a general understanding is sufficient. Then, select a few to study in depth to avoid confusion. Only with focus and depth can breakthroughs be achieved in trading skills.
