[Causes of unstable mentality]
A big reason for unstable trading mentality is "inconsistency between cognition and behavior"
To take the most common example, when you see an underlying stock rising a lot, you tend to follow the trend without presupposing the end of the trend. However, many people subconsciously think, "The rise should stop, right?" or "It has risen so much." It’s probably going to fall, right?”
At this time, if the strategy you want to implement is to move the exit point through adjustments, and be "passively" swept out of the market when the market retracement is large enough, in order to maximize your bite on the market that does not know when it will stop. But in my heart I always thought that the market should be over. Just imagine what changes will happen to your mentality?
① If the market is really over as you thought, then it is easy to think, "If I had known, I would have stopped taking profits, otherwise I would have made less money."
② If the market continues to go down, it is easy to think, "Fortunately, I didn't sell out first, but if it rises too much, will it reverse?"
What if you are unlucky and continue to sell out when you think the market is about to end? What if you want to avoid being dumped and retrace sharply when the market ends? The next time you encounter the same situation, you will easily become at a loss as to what you planned before entering the market.
In fact, it is because I do not have a clear understanding at the bottom of my heart. Many decisions in trading are "choice issues" rather than "right or wrong issues." Once you make a choice, you should accept its advantages and disadvantages. Only by accepting the transaction as it is can you reduce cognitive ambiguity. By reducing cognitive ambiguity, you have a greater chance of reducing the frequency of "inconsistency between knowledge and action."
When we can clearly understand that making trading choices has its advantages and disadvantages in most situations, the question returns to "Which choice is more acceptable to me?" If we have a way to start thinking about this problem, we have eliminated a lot of it. Factors that may affect mentality, isn’t this what mature traders do?
