Four Psychological Factors Affecting Foreign Exchange Investment

Foreword: The high risk of the foreign exchange market has been recognized by most Huimin. Most experienced Huimin agree that "foreign exchange speculation is speculation psychology", which basically emphasizes the important influence of psychological factors on foreign exchange investment. Correspondingly, there are also many slang expressions in the foreign exchange market that support this view, such as "The farther away from greed and fear, the greater the chance of success", "You are the hardest enemy to defeat" and so on.

In fact, investment gurus, including Buffett and Soros, always advise investors to "reduce emotional impulses and maintain a good investment mindset". In the foreign exchange market, there are still cases of suffering huge losses due to psychological impulses, and a very small number of Huimin people even cause serious tragedies due to psychological imbalances... Therefore, investors' own investment behavior and psychological factors have caused greater losses than other risk factors.

One. "Lazy"

The main manifestation is the mentality of getting something for nothing. Although everyone knows that there is no such thing as a free lunch, the vast majority of people still want to get a free lunch. Therefore, they cannot really answer the following questions accurately from their hearts:

1. Is investing in gold, foreign exchange, futures, stocks, etc. a business or a gamble? Most people see it as a gamble. But most people will never admit it with their lips. Then we ask again:

2. If you consider investing in gold, foreign exchange, futures, stocks, etc. as a career, then how much time and effort do you invest in preparing for the investment? If a person wants to become a mathematician, physicist, electrical engineer, or doctor, lawyer, etc., the first thing they must do is to go to school to acquire the most necessary basic knowledge. Investing in gold, foreign exchange, futures, stocks, etc. is more difficult than the above majors because the potential high rate of return attracts a large number of talents. But how many people devote more time and energy to studying the knowledge of the investment market than those who are other experts? From this, we can see that for any investment variety, doing your homework and learning knowledge are prerequisites.

3. Most people always want to get so-called inside information from friends, securities dealers, dealers, or various other channels, or pay great attention to the so-called news in newspapers. If we ask, most of the information in this market is free, and free information is often worthless. Besides, any information in the market is purposeful, what do you think about it? Many investors are keen to inquire about each other's views on the market, and they follow what they see without careful analysis. If we say that inquiring about other people's opinions is harmful but not beneficial. Do you believe it or not? For example, the market is a lot of comments, including professional and professional consulting service providers, and some trading platforms provide it.

Generally speaking, the comments provided by consulting service providers are more objective, because this is their source of profit, and the trading platforms provide different quality. Dealers' comments are only incidental and will not increase their profit points. Especially now that our country's market has just begun, even some illegal traders are providing market comments. We know that traders' profit source is trading volume, so they will encourage investors to intervene in some risky markets. The more investors operate, the greater the traders' profits. But the investment market is unpredictable, and the more operations, the more mistakes will be made. And this kind of short-term speculation opportunity is difficult for ordinary people to grasp.

In short, there are many kinds of mentality of getting something for nothing, and it can even be said that it is ubiquitous. Without hard work, it is impossible to get corresponding rewards from the market. Even if you get it for a short time, it is very likely that you will have to pay elsewhere in the future.

II. "Wish"

It is wishful thinking. Its main manifestations are as follows:

1. Seek information that is beneficial to you.

Investors tend to have a subjective expectation of market trends based on their own interests, so they are particularly willing to get gossip that is beneficial to them. In fact, experienced investors know that the vast majority of so-called "news and news" in the market is spread for the benefit of a particular interest group. The reason why wishful thinking is the mentality of losers is that it focuses on the immediate things, and the market is always concerned with the future.

2, lose not to pay, but also up the ante.

We can often see that many people are easily fooled by some charlatans after they have a terminal illness. Believe in some ancestral secret recipe or some special ability. Many investors are reluctant to admit their mistakes after knowing they have made a mistake, but wait for it under the excuse of the so-called "stuck". The mistake these people make is to disrespect the market. When a person loses, it is when the market clearly tells you that you have made a mistake. The market is objective, and it will never end well against the market. Respecting the market is something an investor must be aware of.

3. Human nature has a tendency.

Only want to believe what you want to believe in your subconscious, not what is true. Only want to hear what you feel comfortable with in your subconscious, not what is true. Experienced investors know that a successful investment decision is often a decision that feels uncomfortable in your heart. The investment decision-making process is often a selection process. Of the many options available, there is always one that makes you the most uncomfortable. In the vast majority of cases, this plan often proves to be the most successful after the fact.

III. "Greed"

The performance is obvious. Everyone knows that greed is not a good thing, but the vast majority of people can't quit greed.

One manifestation of greed is the phenomenon of "making small money and losing big money" that we often see. Most investors feel that when they make money, they feel that the numbers on the books are not as safe as the bag, and they are eager to take profits. And when they lose money, they refuse to admit the debt and try to get back the tie, resulting in more and more losses.

Experienced investors know that quitting greed when you lose is hard, and quitting greed when you win is even harder. Some even think that you can't quit greed when you win. The last obstacle to great success. Investors are controlled by greed and often suffer from a disease that Wall Street calls "market disease". That is, the desire to operate is extremely strong. I can't wait to have the opportunity to operate every day, or even want to do it several times a day.

If you don't go to the market for a short time, you will feel restless and don't want to eat. This kind of greed is very common among junior investors. This concept is seriously wrong. From the historical experience of the investment field, frequent short-term operations are a very risky market, and medium and long-term investors have a higher chance of making money. Moreover, the current domestic bank spreads are relatively high, which further limits the space for short-term operations.

Greed is a mental illness of many people, and greed is insatiable everywhere in life. In the foreign exchange market, you also need to earn the last penny. You always hope to buy at the lowest point and sell at the highest point. As a result, you miss the best opportunity to buy and sell. Not only can you not make money, but you are also likely to lose money. As far as the foreign exchange market is concerned, the highest and lowest points are fleeting, and investors don't have to ask for them, but the relative lows and relative highs exist for a long time and are easy to catch. There are many famous quotes in the foreign exchange market that teach investors not to be greedy, such as leaving the fish head and tail to others, and greed will lose.

IV. "Afraid"

"Fear" refers to the "fear" of most ordinary investors. In fact, experienced investors also have "fear", but their "fear" is the opposite of that of ordinary investors. Investors "fear" the market, but not themselves. They are very "awe" of the market, but very confident in themselves.

Ordinary investors are just the opposite. Ordinary investors have no fear of the market, so they tend to buy at the highest point and sell at the lowest point. But they also have fear, that is, they are afraid of themselves. When the market rises again and again to reach the highest point, they are afraid that they will miss the bus and are not afraid that the market is already very fragile. So they are always stuck at the top, and they are heavy. And when the market falls again and again to the lowest point, they are afraid of the end of the world and rush to escape. Therefore, the greed and fear of successful investors are just the opposite of that of ordinary investors.

Investors are afraid when ordinary investors are greedy, and greedy when ordinary investors are afraid. The "fear" of ordinary investors is also manifested in the hesitation and impulsiveness of investment decisions. This is a different manifestation of the same weakness. This means that the "fear" of ordinary investors is very easy to infect each other, thus showing a strong group nature. When people's emotions infect each other, reason ceases to exist.

The "lazy, willing, greedy, and afraid" mentioned above cannot be completely overcome, because they are manifestations of human nature and are innate. But the degree of their performance can be controlled. Successful investors are able to successfully control them within a moderate range so that they do not affect rational thinking.

Although the truth is simple, it is very difficult to do. Because it requires a person to reinvent themselves. Just like the popular methods of quitting smoking and losing weight in society, in fact, the methods are not complicated, but how many people can persevere to the end?

Therefore, in a word, if you want to defeat your opponents, you must first defeat yourself. Those who cannot defeat themselves will never succeed in the investment market. Finally, a sentence for investors: three points rely on analysis, seven points on operation.