People often make profits or losses in places they least expect.
The decline makes me excited, not only because I can get cheaper chips when I am short or not fully invested, but what makes me even more excited is that this process will cause many people to lose money and leave the market.
There is no doubt that the amount of liquidation during a sharp drop is always greater than that during an increase. In other words, when the market is falling, there are far more people who lose money than when it is rising. When it is rising, only short sellers lose money, and when it is falling, long sellers and spot holders are all facing losses. In addition, people are stubborn in the face of losses and leave when they make a small profit, which is also an important reason.
With the continuous declines and liquidations of long positions, spot holders are facing increasing floating losses. Whether it is profit withdrawal or loss realization, these people will feel unhappy, and their mentality will change, and they will make more emotional operations. The liquidated ones may continue to increase leverage trading, and the spot holders may sell at a loss or increase investment costs. The psychological pressure of selling at a loss and increasing investment costs will increase, and the ability to bear risks will become worse. In short, as long as the decline continues, this negative chain reaction will continue to increase. Finally, the "80/20 rule" of the financial trading market is achieved.
At this point, back to the beginning, some people may think that it is a bit twisted to be excited when seeing others lose money? This question seems to be true at first glance, although it is a bit naive.
But if you think about it carefully, isn't this just a substitution of concepts?
Facing a decline, I am really excited, even if I am also losing money, but this is my true emotion. This excitement is not gloating, but finding that the market is still the familiar market, yes, just like first love, it has not changed at all: before the crazier moment comes, most people will always be thrown off the bus, no matter you are an early profiteer or a newbie who just entered the market, everyone is treated equally.
At this point, let’s think back to a few months ago, or even earlier. I believe that at that time, many people secretly vowed in their hearts: the bull market is just around the corner, and I must catch this ride.
So far, have you really not felt shaken or uneasy in this process? Whether facing profit drawdown or loss, there is no one who can truly keep calm. I am the same. As long as you are a human, you will be affected by emotions. This is not shameful. You can face or vent these negative emotions, but don't be dragged into making wrong actions. After all, the world is uncertain.
It is not easy to squeeze you out of the car of a violent bull market just because there are too many people on the car. Rather, it is precisely because there are too few people on the car and it is running too fast that you will be thrown out.
Let’s use positive and negative numbers to describe it here. If your profits fluctuate between -10 and +10 for a long time, your mentality and emotions will also jump back and forth in this range.
Anxiety is at -10, worry is at -20, or even more, but things don't happen as you expected and instead they return to +10.
+10 makes you excited and happy, and you think that the next step will be +50+100. Yes, the next step will also be different from what you expected, and maybe it will return to -10.
After repeating this for a while, inertial thinking is formed, and -10 becomes a tolerable loss wall in your heart. You subconsciously think it cannot be broken. Until -20, your defense line is broken, even if you don't admit it, you will accept it deep down in your heart. As a result, you will become more anxious.
Although you hold on at 20- because of your so-called faith, when it reaches +15, your emotions will start to become unstable, and you will unconsciously think of the state at -10-20. At this time, you are more worried about profit withdrawal. When it reaches +50+100, your anxiety will outweigh the joy of profit. You will think: should I sell some first to protect the profit, or forget it, sell all and wait for the opportunity to buy again. When most people think this way, the phenomenon of +200+300+500 will often occur later.
No one is willing to actively set limits on their thinking. Take the crypto market for example. When entering the circle, who doesn’t want to buy a token and see it go up 10 times or 100 times? Here, thinking and imagination are free. The formation of fixed thinking is nothing more than staying in a certain stage of the market for a long time and finding that the development of events is not as expected. Instead, new thinking is formed at this stage, which is the so-called fixed thinking.
Yes, the market seems to have life, cultivating the subjective consciousness of the leeks, like a hunter, constantly numbing and luring prey, and finally killing them. In this process, the prey has no idea why they died. If they are a little more human, they know that hunters live to kill them, but they still don’t know how they will be killed. They don’t know what a trap is, what a hunting rifle is, and what a hunting rifle is.
Just like traders, they don’t know where they lose money: everything is normal, I sell because I’m afraid of losing money, I run away when I make a small profit because I’m worried about profit withdrawal. All of this is my own choice.
Hunters and prey have cognitive differences across species, which is unavoidable. There are cognitive differences between people, but we are all the same species, so as long as we think more, even if we lose, our death will not be too ugly.
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