Why do you "run away when you make a little profit, but hold on to it when you lose"?
The psychological phenomenon of "running away when you make a little profit, but holding on to it when you lose" is common among humans, and it often stems from people's psychological response to risks and decision-making mechanisms. The following are some possible reasons to explain this commonality:
1. Psychological defense mechanism: People are generally more receptive to evidence of success and skeptical of information about failure. Therefore, when an investment makes a profit, people tend to think that this is the result of their correct decision, and tend to withdraw in time to preserve profits. When an investment loses money, people are more likely to think that this is temporary and can be recovered by continuing to hold or increase investment, so they tend to persist or hold on to it.
2. Loss aversion: Psychological research shows that people's pain of loss is usually greater than their joy of profit of the same size. Therefore, when faced with losses, people are often more reluctant to accept reality and are more inclined to seek psychological comfort by continuing to hold or increase investment in order to recover losses.
3. Sunk cost fallacy: When making decisions, people often consider past investments, that is, sunk costs. When an investment loses money, people may feel that they have already invested a lot before, so they are unwilling to give up easily and hope to recover the previous investment by continuing to hold. This mentality will cause people to be more inclined to hold on when they lose money.
4. Overconfidence: Some investors may be overconfident in their decision-making ability and believe that their judgment is always correct. This confidence may cause them to exit in time when they make a profit to show their wisdom; while in case of loss, they stick to their judgment and believe that the market will develop according to their expectations.
5. Lack of stop-loss strategy: Many investors do not set a clear stop-loss point before investing, that is, they exit in time when the loss reaches a certain level. The lack of such a strategy may cause investors to be unable to make decisions in time when they lose money, thus falling into a situation of holding on.
