How to Go Against Human Nature in Trading? A Must-Read for Retail Investors!

Everyone knows that trading goes against human nature, but what exactly is the human nature that we are going against? How should we go against it? Old Yu will share his trading experiences with everyone.

The vast majority of investors execute trades based on their feelings and emotions. For example, take the matter of taking profits; when there are profits, the fear of giving them back leads most people to choose to take profits. Taking profits is a way to eliminate the fear that retail investors have. Another example is stop-loss orders; the feeling of cutting losses is more painful than any suffering in the world. To avoid this pain, many retail investors choose not to cut losses, which is also a result of following their emotions.

Another example is capital management. Position management is an extremely tedious and complex task, requiring constant adjustments based on market conditions. This demands great execution and patience. The most basic aspect of human nature is to seek benefits and avoid harm. Nowadays, people lack even the patience to watch a movie; who still has the patience for position management?

Because trading is complex and painful, and human nature inherently dislikes complexity and pain, the real challenge against human nature lies in whether you can manage your emotions and feelings, and whether you can remain calm with every trade. The solution is to have your own stable trading system, using a structured framework to understand our trading behavior. Every trade we make should not be blind.