I once jokingly told a friend that using Murphy's Law to test whether an investor's basic qualities are qualified is a good method. If you have a trading system now, this system will find that you have lost up to 5 times in a row when counting historical data. So, what should you do after you lose money 5 times in a row? If your answer is to increase the position operation. Well, "Congratulations" you answered wrong. The correct result is that the position should be reduced. That is, you should first reduce your losses and start making money.

Investors have two core principles: first, they must control losses; second, remember the first principle, and if there is any violation, deal with it in accordance with the first principle. Therefore, any time you start losing money, the best strategy is to reduce your position. Continue to lose money and continue to reduce your position. Only when you start to make profits can you gradually increase your position.

This is not only a principle that needs to be followed in investment, but also in life. Recently, a friend of mine was in a very bad state and could barely make ends meet. In order to earn living expenses, he had to stay up for two days doing private work. When a person reaches this point, it is actually the same as suffering a large loss in investment. I told him to take a good rest after finishing his work. After finally finishing the work, I wanted to reward myself, so I went shopping with my friends, but my wallet was stolen.

Many investors often encounter similar situations during the investment process. When an investor suffers a loss, the average investor knows how to deal with it at the beginning, but when an unexpected loss occurs that exceeds his psychological tolerance limit, how should he deal with it?

Irrational investors often exhibit two types of actions. The first type is the characteristic of being motivated to gamble. At this time, there are often two results. Some people bet right, so this pattern becomes a psychological must-do pattern for them. But there were always times when he bet wrong. If it is leveraged trading, it will basically be eliminated. The second type of person’s choice is to admit their losses and exit. But if you admit your loss and leave at this time, you will also lose the opportunity to recover. Choosing to leave the market should not be considered only when the losses are uncontrollable. The decision must be made within the risk controllable range.