Some people say that mentality accounts for 75% of trading, some say 80%, and some say 85%. Although the proportions are inconsistent, they all illustrate one situation: mentality is very important in trading, even more important than technical analysis.
There are many manifestations of mentality problems. For example, after placing an order and starting to make a profit, you are in a hurry to close the position, even though you are thousands of miles away from the stop-profit price. When there is a floating loss, you hold on to it. You don’t stop loss when you should, and you make the stop loss bigger and bigger, or even cancel the stop loss directly, using the entire account as a stop loss, hoping that one day you can return to a profitable state, resulting in less profit and more loss; or after making a profit, you are full of confidence, feel that you are invincible, and blindly chase orders, but after losing money, you lose confidence and dare not place an order again even if there is a trading signal, and miss the opportunity to make a profit in vain. What’s worse is that some people trade in revenge after a loss, in order to cover the loss with the subsequent profit as soon as possible, and eventually lose more and more; while some people, after missing the best entry point, regret it very much, and enter the market with a large number of hands in the hope of making up for the missed profit before, but the price turns around and loses a lot of money...
The mentality problem we often talk about is that when emotions appear, it causes negative behavioral effects. For example, when we lose money, we may just say "Oh, I lost money, I have to work hard on the next one" at first. When we lose money again, we may think that there is something wrong with our trading technology or that the market conditions of the day are not suitable for trading. After multiple losses, the fear in our hearts is getting bigger and bigger. At this time, our first step should be to wait and calm down, and ask ourselves what we are afraid of. If we think the word "fear" is too serious, we can ask ourselves what we are afraid of. The most important thing in this step is to be honest with ourselves, because only by being honest with ourselves can we find the root cause of the problem.
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