There are very few successful investment managers who possess the above three characteristics. Their success is not due to mastering powerful investment tools and methods, but because they can resist human instincts and control their emotions, which is the biggest difference between professional investment managers and amateur investors.
Postscript:
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Why do most stock investors lose money ? What is the difference between an expert and an amateur? Based on my more than ten years of consulting experience and a large number of statistical survey reports, I found that the answer lies in “mindset”. In stock investment, the method is not the most important thing, the most important thing is to control emotions and maintain a stable mentality . However, this is exactly the weakness of small stock investors – letting their emotions go up and down with the fluctuations of the stock market, making wrong decisions at critical moments… It is precisely because of this weakness that small stock investors often become the reverse indicator in the eyes of experts . Because the failure probability of individual investors is very high, professional traders can make money as long as they operate in the opposite direction of stock investors.
Therefore, while learning trading methods, individual investors must cultivate their emotional control ability and train their rational and sober minds. In another article, ” How to Control Emotions and Make Investment More Rational ,” I introduced several methods to practice the state of entering and exiting the stock market. The third characteristic of institutional investment managers described above, dual personality, is actually to completely separate the seven emotions and six desires in daily life from the indifference and ruthlessness in stock trading, without interfering with each other.
In addition, as mentioned above, individual investors often lack discipline when they rely on self-discipline. To address this problem, stockholders can adopt a mechanical trading method to force execution of things that they cannot do emotionally. For example, after buying stocks, immediately set a limit sell order with automatic stop loss and automatic take profit. Set a stop loss price based on the volatility of individual stocks and technical analysis, and set a take profit point at the target price, or set a moving stop loss , so that the computer system can automatically close the position and lock in profits for you.
In short, as an ordinary investor, please remember: the key to your success or failure and the biggest problem is often not the method, but the mentality. Emotional control is like sailing against the current. No matter how difficult it is, you must do it. Otherwise, don’t invest in stocks. If you can’t eliminate the emotions of small investors, your investment will only go to hell.
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