Human nature is the poison of operation-taking profit is always simple, and stopping loss is always too difficult. Risk management is very important in futures trading. It can be said that seeing the market is only half the success of the transaction. If there is no scientific risk management strategy, success will often be missed. Many traders believe in the risk management principle of "limited losses and unlimited gains". However, the opposite is true. They have a completely different mentality when dealing with the profit and loss of future positions: take profit is always very simple, and stop loss is always too difficult! First, the inspiration of psychological experiments Why is it always simple to take profit and always too difficult to stop loss? The answer comes from human psychology. To understand this problem, let's look at a commonly used psychological experiment. Suppose you answer the following question: 600 people are infected with a fatal disease, and there are two drugs to choose from: (a) It can save 200 lives. (b) There is a probability of 1/3 that everyone can be cured, and there is a probability of 2/3 that none can be saved. What kind of medicine do you choose? Choose A, are you sure you can save 200 people? Choose B, how many people do you want to bet? So this choice is easy: 72% of the respondents choose A. Because you dare not bet on how many people you can save. Here is another problem: 600 people are infected with a fatal disease, and there are two drugs to choose from: (a) It will definitely kill 400 people. (b) There is a probability of 1/3 that everyone can be cured, and there is a probability of 2/3 that none can be saved. Are you willing to choose to kill 400 people? No, at least there is the possibility of saving everyone. Only 22% of people choose A for this question. This interesting experiment was originally designed by Kahneman and Tevez according to 198 1 year. In fact, these two questions are exactly the same, but they are expressed in different ways. The first focuses on gains, and the second focuses on losses. The two scientists used this question and other similar questions to draw the following conclusion: people have different attitudes towards gains and losses, that is, people are more willing to lose than win. Let's see how the above conclusions are applied to the futures market. In investment, profits and losses are very common. Suppose you have lost money on future positions, what will you do? Like most people, you will bet that it will be brought back one day. Now suppose that your future positions has made a profit, and you won't gamble again this time. Your method is simple: make a profit immediately and put it in a bag. This phenomenon of "taking profit is always simple and stopping loss is always too difficult" violates the principle of "limited losses and unlimited profits". After long-term trading operations, many investors' capital accounts are shrinking day by day. What is even more frightening is that because one or two big losses cannot be recovered, the funds are almost at a loss. Second, the explanation of "stop loss is too difficult" by expectation theory. We pay more attention to gains and losses of the same size, which is called expectation theory. This theory was first put forward by Kahneman and Tevez based on 1979 (Kahneman and Tversky, 1979a), which can explain why traders prefer to take profit rather than stop loss. Furthermore, psychologists believe that this phenomenon can also be partially explained by the "regret theory". Stadtman is an authoritative scholar of regret theory, and he pointed out the obvious facts (refer to his article Tracking Error, Regret and Asset Allocation Strategy written in 1994). According to Stadtman, we would rather lose than win, because we dare not face the reality of failure. Applying the above theory to the futures market, we can imagine that we don't have to admit that we made a mistake just because we hold the future positions that has already lost money (betting that it will come back). After all, the contract held has not been liquidated, and the loss is only a book loss. Can you say I lost money? In this case, most people prefer to believe that something will happen to reverse the direction of the market, so when they lose money in their positions, they tend to stop trading and stay where they are. Shefrin and Stadtman 1985 give an explanation of why people don't want to stop losses. At that time, they used the stock market to explain. Now we might as well borrow this explanation to the futures market. Generally speaking, people speculate on futures for cognitive and emotional reasons. The reason why they speculate in futures is that they think they have information, but what they actually have is noise. They speculate in futures because it can bring them pride. When the decision is correct, speculating in futures brings pride, and when the decision is wrong, speculating in futures brings regret. Investors want to avoid the pain of regret, so they have to hold the losing future positions in their hands to avoid real losses or blame critics. Regret theory is also called "risk aversion". As a typical self-protection attitude, it explains why it is too difficult for futures investors to stop losses. Another phenomenon related to www.fxway.com.cn's collection of foreign exchange transactions can explain the expectation theory, which is called "mental isolation". The basic reasoning is as follows: We like to classify and treat the unknowns differently, instead of taking them as a whole and making overall optimization consideration. A typical symptom of this phenomenon is that due to the occupation of funds, it is difficult for future positions to invest in other more promising asset portfolios. We always try to optimize every investment (which is a stupid way), even though we know it means losing the total investment opportunity. I once witnessed a customer who was trapped for more than three months because he lost a few pieces of wheat, and finally didn't carry it back, so he had to admit that he was out. In the meantime, he missed the trading opportunity because of the lack of funds and irritability. Cognitive dissonance can finally explain why "stop loss is too difficult". Balancing the loss of future positions is tantamount to admitting that his views on the market are inconsistent with the cruel reality of the market. Third, why "take profit is always simple" When the market trend is consistent with the direction judged by traders, future positions begin to generate floating profits, which is very different: the winner has nothing to hide. But winners face another trap: they prefer to think that their success is the result of personal efforts rather than luck. Social psychologists call this phenomenon "conceit". At least on average, we are all conceited. Most people think that every virtue of an individual is above average-including driving skills, sense of humor, risk control ability and life span. For example, when a group of American students were asked about their driving safety, 82% thought they were in the top 30%. What does this mean for investors who make money in the futures market? According to this theory, many investors attribute their recent money earned in the futures market to their higher investment level than ordinary people. And because they think they are superb, they operate more frequently, and some even try to capture every fluctuation of the market. So their enthusiasm for high profits mainly comes from personal confidence. Collection and arrangement of foreign exchange transactions in Www.fxway.com.cn. Conclusion Many investors generally have the confusion that "take profit is always simple and stop loss is always too difficult", which is actually a weakness of our human nature. If you want to beat the market, you must first beat yourself. In investment, profits and losses are very common. If you want to make a long-term profit in the futures market, you must treat the profit and loss of investment correctly, which is the premise of establishing a scientific risk management strategy. Before trading, make a detailed trading plan and then strictly implement your trading plan. Don't take profit casually, and stop loss should not be "soft-hearted". My experience: Dear gold investors, you can easily find that many investors lost money when they first entered the market. Have we ever wondered why they lost money? Everyone will encounter this problem, but I think not many people really ask themselves. In China, the gold market has just opened, and investors don't know much about the properties of gold. Many investors still operate gold with the idea of operating stocks. As a result, they know what it is without thinking. Of course, some investors are doing well because of the company's platform, so they should pay more attention to it. There are few investors who really make a profit. Our investment is for profit. To make a profit, we must be strict with our own operations. It sounds vulgar, but there are a few things that everyone knows are really well done. Let me share my operating experience with you first: 1) Light warehouse operation, with each loss not exceeding 10% of the total funds. 2) Stop-loss orders must be set for each operation, which is not easy to modify. 3) If you don't close the position without justifiable reasons, you can stop profit and protect capital. 4) Never let the profit of a position turn into a loss. 5) The market must wait for the opportunity, and there will always be something extraordinary. 6) Be firm in entering the market, and don't enter the market if you are depressed. When in doubt, close the position and leave. 7) Never operate against the market, and prefer to wait and see outside when the market direction is not clear. 8) Don't trade based on revenge. 9) After making profits continuously, you can withdraw some profits for a rainy day. 10) When trading losses, remember to increase the price according to the gambler in order to amortize the cost. 1 1) Avoid small profits but quick turnover. 12) people abandon me and take it, and people abandon me and take it. 13) Don't guess the bottom easily, but measure the top. 14) Plan your transaction and trade your plan. 15) You should avoid changing the trading plan without justifiable reasons. 16) Don't enter the stadium when you are unwell and unhappy. 17) Don't trade the funds necessary for life. 18) analyze the market trend from many aspects and choose to enter the market with the approval of many parties. The above is what I think is more important to myself in my operation. I hope it helps you. Welcome to call to discuss 13 122707809. There are many things that I haven't remembered at the moment. I believe that as long as I follow my own plan, I can make a profit in the market. If that friend feels uncomfortable when making a trading plan, I'd be happy to study it with you.