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Why do people fight to the death when they lose money, but run away when they make a little money? Let's first look at an experiment that economists did in a domestic factory more than ten years ago. The subjects of the experiment were divided into two groups of workers. At the beginning, they told one group of workers that if they could complete the specified production tasks this month, they could get a bonus of 1,000 yuan, while the other group of workers were told that they would have a bonus of 1,000 yuan this week, but if they failed to complete the tasks, the money would be deducted. The results of multiple experiments were surprisingly consistent. The efficiency of the second group of workers was much better than that of the first group. The explanation given by psychology for this phenomenon is called loss aversion. 1,000 yuan is a gain for the first group of workers, but a loss for the second group of workers. Compared with the same amount of gains, human nature is more disgusted with losses. Any loss in life will bring pain, and we instinctively resist this pain, so we are unwilling to stop losses, at least hoping to get back our original money. Besides, the joy of receiving a salary of 1,000 yuan is far less painful than losing 1,000 yuan on the road. In the process of our actual trading, our emotions after opening a position are anchored on the account principal. Once there is a floating loss, we will instinctively hate it. This emotion will make us hold on to the end, or even increase the position with floating losses in an attempt to recover the principal. When our account has a floating profit, we will instinctively think that the money is already ours. This emotion will prompt us to lock in the money and run away as soon as we make a little profit. In addition to research in the psychological and medical fields, there is also a physiological explanation for loss aversion. There is a part of the brain called the amygdala, which is an important structure for emotions and memory. Animals with damaged amygdalae on both sides lack the recognition and response to fear events. Once a person may face losses, the amygdala in the brain will become active, and people with damaged amygdalae or naturally insensitive people are more likely to succeed in trading.

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Why do people fight to the death when they lose money, but run away when they make a little money?

Let's first look at an experiment that economists did in a domestic factory more than ten years ago.
The subjects of the experiment were divided into two groups of workers. At the beginning, they told one group of workers that if they could complete the specified production tasks this month, they could get a bonus of 1,000 yuan, while the other group of workers were told that they would have a bonus of 1,000 yuan this week, but if they failed to complete the tasks, the money would be deducted. The results of multiple experiments were surprisingly consistent. The efficiency of the second group of workers was much better than that of the first group. The explanation given by psychology for this phenomenon is called loss aversion.
1,000 yuan is a gain for the first group of workers, but a loss for the second group of workers. Compared with the same amount of gains, human nature is more disgusted with losses.
Any loss in life will bring pain, and we instinctively resist this pain, so we are unwilling to stop losses, at least hoping to get back our original money. Besides, the joy of receiving a salary of 1,000 yuan is far less painful than losing 1,000 yuan on the road.
In the process of our actual trading, our emotions after opening a position are anchored on the account principal. Once there is a floating loss, we will instinctively hate it. This emotion will make us hold on to the end, or even increase the position with floating losses in an attempt to recover the principal. When our account has a floating profit, we will instinctively think that the money is already ours. This emotion will prompt us to lock in the money and run away as soon as we make a little profit.
In addition to research in the psychological and medical fields, there is also a physiological explanation for loss aversion. There is a part of the brain called the amygdala, which is an important structure for emotions and memory. Animals with damaged amygdalae on both sides lack the recognition and response to fear events. Once a person may face losses, the amygdala in the brain will become active, and people with damaged amygdalae or naturally insensitive people are more likely to succeed in trading.

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