How to Recognize Your Own Subjectivity, Emotions, and Human Weaknesses - Cryptocurrency Exchange Platform

Human Weaknesses—How Desires Affect Trading

Desire is an instinct of human nature. Properly managing your desires is beneficial for trading; otherwise, it will impact your trading performance.

First, desires must match your abilities. If desires exceed your capabilities, it will cause suffering. Wanting something you cannot get is the most painful, such as having fantasies about trading profits and win rates. When market conditions are right, if you cannot achieve your goals, you will feel pain. To escape this pain, you may make irrational decisions.

Second, you should not have desires towards the market or the asset. For example, if a major top pattern breaks out and you go short, there’s no problem. But if you have desires for it, your emotions will be affected. Desire initially manifests as expectations, hopes, or longing. If you expect a big drop after a breakout, you might take a large position. If the breakout fails, it will cause significant losses. If you expect to make a lot of money from a breakout, failure will disappoint you. Under the influence of disappointment, you may make many irrational trades, rushing to open positions blindly and carelessly. When you have too many expectations for an asset, it can cause tension and unease, preventing you from remaining calm.

Based on our understanding of the market, we need to interpret it objectively and entrust ourselves entirely to the market. The biggest obstacle to good trading is subjective factors—emotions and human weaknesses.

1. Subjectivity: Overthinking, arrogance, self-righteousness, preconceived notions, subjective assumptions

2. Emotions: Excitement, frustration, regret, pessimism, despair, anger, pride, stubbornness, fear

3. Human Weaknesses: Greed, gambling mentality, desires, chasing highs and selling lows, instincts, attachment, avoidance, intuition, seeking easy refuge, recent bias, confirmation bias, aversion to regret, etc.

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