[Summary]
The psychology of not being able to take profits is the psychology of postponing taking profits because you think it will go higher.
What is most likely to lead to failure due to an insecure mentality is not the lack of knowledge itself, but the fact that one ends up justifying a hasty decision afterwards.
In actual investing, you first need to prepare step-by-step profit-taking rules. However, we cannot overlook the fact that it is easy to regret it after the unrealized gains disappear.
In this article, we will explain the psychology of not being able to make a profit not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First, divide based on psychology that cannot be determined.
When looking at the psychology of not being able to make a profit, first separate what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The psychology of not being able to make a profit is not the only factor that determines a decision. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Situations where it is easy to fail due to the psychology of not being able to secure profits
If you want to look at the psychology of not being able to make a profit as a pattern of failure, first of all, make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | To look at something with an uncertain mentality |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
It's not only when you don't have enough knowledge that you get stumbled by an insecure psychology. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Do not decide to buy or sell the moment you see a psychology that does not allow you to make profits.
- Do not mix your own holding period with a time frame that suits your psychology of not being able to secure profits.
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to settle on a single correct answer based solely on psychology. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using the psychology of not being able to make a profit as a basis for making an actual decision, check at least these five things.
- Can you explain in one sentence the purpose of looking at psychology that cannot be determined?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking the psychology of not being able to secure profits is not to speed up action, but to reduce unnecessary mistakes in judgment.
Summary
The psychology of not being able to make a profit is a material for organizing investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- Determine the purpose first to determine the psychology that cannot be determined.
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the psychology of not being able to make profits as a tool to pause before buying or selling, rather than as a word that forces you to make a hasty decision.