Why can't you control your position?
In trading, greed makes people eager to get the maximum return. When seeing the market rise, many people will ignore the risks and want to increase their positions to get more profits. This mentality makes traders ignore the uncontrollability of market fluctuations, resulting in heavy positions when risks increase.
When the market fluctuates, traders are prone to panic of "missing the opportunity" and are eager to seize the opportunity with all their strength. This fear drives people to hastily increase their positions and even ignore reasonable trading plans. FOMO makes it impossible for people to calmly assess risks and then lose control of their positions.
After several successful transactions, traders are prone to overconfidence and feel that they can always predict the market. This misconception will make people underestimate risks, blindly increase their positions, and forget the uncertainty of the market.
When losing money, people are often reluctant to admit mistakes and try to spread the cost by increasing their positions. This "more losses, more increases" mentality puts people in a vicious cycle, with larger and larger positions and higher risks.
Solution:
1. Strictly set the risk of each transaction to no more than 5%-10% of the total account funds to ensure that even if losses occur, it will not have a significant impact on the overall funds. This fixed rule can effectively help you deal with market fluctuations rationally.
2. Set clear stop loss and take profit points before each transaction and strictly abide by them. Don't be dragged by emotions, and ensure that when the profit or loss reaches the set target, you automatically exit the transaction to avoid expanding risks due to greed or fear.
3. Don't enter the market with a full position at one time, but adopt a strategy of building positions in batches, so that you can spread the risk. If the market fluctuates in the opposite direction, you still have room for adjustment to avoid excessive one-time losses.
4. Reflect after each transaction, analyze the reasons for success and failure, and stay rational. Acknowledge that losses are part of trading, accept wrong decisions, and avoid repeating the same mistakes in the next transaction.
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