Avoid Trading Psychological Traps (Live streaming, follow the host to understand trading psychology)

I. Market Sentiment Cycle: From FOMO to Panic
Core manifestation: Anxiety-driven chasing during rallies (FOMO), panic selling during dips, trapped in a "buy high, sell low" cycle
Root cause: Linear thinking—mistaking short-term price action for long-term trends
Key to breaking through: Understand market cycles, practice Buffett's "be greedy when others are fearful, be fearful when others are greedy"

1. **Loss Aversion**
* "As long as I don't sell, it's not a real loss" leads to holding losing positions
* Sunk cost fallacy: investing more to break even
* Pain of stop-loss far exceeds pleasure of taking profits

2. **Anchoring Bias**
* Anchored to historical highs, believing "it will always come back"
* Deceived by "original price vs. current price" comparisons
* Over-relying on past performance to predict the future

3. **Herd Mentality**
* Abandoning independent judgment, blindly following the crowd
* Becoming "the last bag holder" at bull market peaks, "panic seller" at bear market bottoms
* From tulip mania to cryptocurrency, history repeats itself

III. Five-Step Rational Decision-Making System
1. **Establish Valuation Anchors**
* Use metrics like P/E, P/B to judge asset valuation
* Alert when overvalued, position when at valuation bottom
* Price-blind test: ignore historical price, focus on intrinsic value

2. **Set Investment Discipline**
* Pre-set profit targets and stop-loss levels, execute strictly
* No more struggling over "should I sell," execute automatically by rules
* Beware "detachment"—thinking you can beat the system

3. **Embrace Probabilistic Thinking**
* Every trade is a random event
* Evaluate the system over 20-50 trades
* Stop obsessing over "predicting right," focus on "executing right"

4. **Reshape Review Thinking**
* From "error log" to "success log": process matters more than results
* Profits might be luck, losses might be low-probability events
* Treat every investment experience equally

5. **Cultivate Patience**
* Overcome natural impatience tendency
* Data proves: the longer you hold, the higher the probability of profit
* Extend your time horizon; peaks are just small waves in the long-term trend

IV. Core Principles
* **Markets never change because human nature is eternal**
* **Successful investing isn't about beating the market, it's about beating yourself**
* **Transform from a slave to emotion into a master of reason**
* **Sow when no one pays attention, harvest when voices are loudest**

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