Emotion is the devil of investment, how to use emotion to earn money?
Faust painted in the study, Delacroix 1827
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The hardest thing in investing is not to look at the K-line analysis, not to interpret the news in depth, not to understand the depth of a project, but to control emotions, especially in the digital currency field.
Why do you say that?
First, even with excellent analytical skills, it is difficult to withstand your frequent operations;
Second, even if you have a good quantitative robot, just after you set up your trading strategy for a short while, you want to change your strategy because you think of a "better" strategy;
Third, even if it is a good investment target, you can't take it or just lose money, because the bitcoin of about 3,300 dollars in the early 2019 caused your panic, throwing; 13,000 US dollars of bitcoin evokes you again. The desire to buy.
Fourth, the final competition of the master is that the emotion is emotion. Because of the judgment of the project, the judgment of the trend is basically the same.
Emotions are unconscious. They occur before our reason and perception. In order to react to the external environment as soon as possible, from the perspective of evolution, emotions are positive and meaningful, and the lion tiger adrenaline is rapidly secreted, fearfully Hide, run away nervously, fight back in anger, and so on. It is possible to go to the investment market, and emotions are left to be counterproductive most of the time, so many people say that investment is anti-human .
Emotion is the devil of investment, but the devil of others is not necessarily the devil for you. The most sober investor in the crazy public can make money. For example, the short-sellers in the US subprime mortgage crisis, such as the ones who started to buy bitcoin from $5,000 last year to the beginning of this year, or the short sellers at $14,000 in btc. Market sentiment hides the password of wealth, and market sentiment has its own internal laws and cycles.
In the fluctuation of asset prices, it has been observed that the emotionality of investors as a group is also a corresponding fluctuation cycle, and the price is clear. These two cycles are twin brothers, sometimes even causing each other. If you are aware of this, you can bring further cognitive improvement in investment methodology. You can judge the current stage of the cycle, thus assisting your investment strategy and improving your winnings.
According to the rhythm of the conversion of the bull and bear, the mood and price cycle can be divided into five stages:
The first stage: early in the bull market, the Mavericks are emerging, optimistic
1, the bear market has been going on for a long time, for example, after two years, the industry has not died, the bull market is coming, the market is not so depressed, but people still can not come out in the bear market thinking.
2, , the price has begun to climb, lasting for a month, three months, or even longer.
3, some people wait, further decline, fall into the market, such as this year btc broke through 6000, everyone said "fall back to five thousand, then stud." Well, this is normal human emotions.
4, there are a lot of opportunities in the market, a little confused, as if you can vote for anything;
5. If the market has undergone major adjustments, people tend to change their minds and believe that the market will return to normal.
The second stage: the formation of the bull market, the consensus.
1, the price climbed, and new highs continued to emerge, while those who did not buy complained that they did not get in early;
2, the market will also adjust, but the adjustment time is smaller than the majority expected , the time is also short;
3, the opinions of various media or professionals have basically remained the same, and they believe that they will continue to rise; the market is self-reinforcing, and those who do not understand the digital currency are also preparing to enter the market;
4, all the popular currencies have been snapped up, the number of accounts has increased, the word "stau" has reappeared, and conservative investment will be considered stupid. If someone says that it is a bubble, this voice is not at all. Rational, even ridiculed.
The third stage: the mad cow
1, the price has risen sharply, all people began to say, um, there is a bubble inside, but said that this time is different from the past, this is a big bull market, 20,000 US dollars is only the beginning. People's expectations for future prices are very high, and the parties at the time did not feel high.
2, most people default to the bull market will continue to go down, dream of a rich night, many people can not work with peace of mind, speculation under the feast;
3, people's investment expectations continue to rise, 50% of the increase can not be seen at all, 20 times three months, ten times a month, seven times a week story is circulating.
4, There have been many articles about songs and deeds, saying that the bull market is an important and important thing for the nation, the earth, and humanity.
The fourth stage: the bear market begins, the dead pig is not afraid of boiling water
2, self-deception, think that the decline is only temporary, the mouth chanting "technical adjustment of technical adjustment, will soon come back" more and more to buy, the principal is running out, still falling; news or others say that the bear market is coming, he will Negate this;
3, All the good news, can stimulate the rise in the price of the currency, as if "the dead pig is not afraid of boiling water", the market has news: Why did it fall? Is it foreign capital manipulation, is there any dog Zhuang attack? Etc., etc;
4, people who have been short before jumped out to say that they are wise, and those who have been long before and who have taken others to do more are considered unreliable;
5, Zf or mainstream big media may prompt bubble problems and investment risks, further suppress the currency price;
6, the leek began to make up his mind not to touch the coin, and said everywhere, "the speculative currency does not make money, and no longer speculates in the future."
7, I don't want to go back to the highest point, I just want to go back to this book. (In the future when the bull market comes, I will throw it back, and the root cause of not making money is here.)
The fifth stage: the late bear market, the front of the disease tree Wan Muchun
1, people think that the decline is bigger than the actual decline; people think that the increase is smaller than the actual increase, tend to sell, wait for further decline;
2, price and information do not have much to do, unless it is extremely heavy news to stimulate the price of the currency;
3, investors follow a conservative strategy, everyone is conservative – because the previous conservative is not able to support this stage, pessimism filled the market "the industry is gone" "This is a liar industry" "only a fool to vote for the number The currency and so on appear,
4, before the propaganda everywhere, "hold the do not move, value investment, long-term holding" people suffer serious losses, no longer publicly express this view, remain silent. Most of the funds have been withdrawn;
5, the annualized 15% 20% strategy began to be praised, conservative investors are sought after.
6, some smart people or organizations have begun to slowly position small positions
The mood and price fluctuations in the bull and bear markets have never stopped. Because this is driven by human nature, a person may be able to escape this cycle, but the group with more samples is absolutely unable to escape this cycle. 100 years ago, 500 years later, regardless of the investment scale, no matter what assets, no matter who you live in, the cycle of this emotion can not escape.
Investors should determine which stage of the current market is based on the behavior of the participants, the attitude of the public, and the media reports, so that you can know what the future trend is. For example, in the third stage, the decisive departure will be made; in the fifth stage, the funds will be put into the market in batches.
The price sentiment cycle is one of the most effective ways to guide mid- and long-term trend investments.