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#Educational_Post 📚
Due to the pressure the market has exerted on all investors and traders over the past two years,
and why 95% of people lose in the market,
It is important to understand Behavioral Finance theory
(Behavioral Finance)
- There is a common behavior followed in every bullish wave divided into three groups of people and three levels of the upcoming wave,
- The first group: represents the fearful
(Fear-based traders).
- The second group: represents the hesitant
(FOMO-driven).
- The third group: represents the greedy
(Greed-driven).
1- The first group and level,
I expect most and the largest percentage will exit at the beginning of the rise, then when they see the continuation of the rise, possibly weeks of ongoing increase, after they exit, they will re-enter at the top, get stuck, and lose their capital along with the profits.
2- The second level
The second group of people will exit in the middle of the rise, and then a large percentage of them will return and enter near the top, as happened with the first group, and what happened with the first category.
3- The third level.
A group of people will be greedy for high percentages and will not make profits or will exit neither at the beginning, nor in the middle, nor at the end, and will get stuck as usual.
This explains and justifies the fact that only 5% of people profit from the market.
(Solution)
- First
You must face yourself and admit your mistake, which group you belong to among the three, so you can avoid the mistake.
- Second
You must set your goals and determine exit percentages at each goal from now on gradually, and commit to them, exiting at each target with the specified percentage.
- Third
After you exit, do not re-enter regardless of temptations, do not be greedy, and know that it is correct and natural that after you exit, the market may continue and rise for several weeks to recover the first and second groups' money and leave the third group stuck.
- And take this as a rule,
Profit in the market is not only in correct predictions but also in discipline and commitment.
- This post is a simple practical introduction and explanation of behavioral finance as much as possible.