In order to become better encrypted investors, I studied hundreds of cognitive deviations. The following is the most important 14:
People are more willing to buy the “entire unit” of the Currency, not a small part of them. This is the cause of the model of the model. Don’t exaggerate the value of the Currency because it is “cheap”. Please understand how the market value works.
Excessive relying on the first information you have. You have heard of a $ 1,000 bits. You missed it. Then it rises to $ 5,000. You don’t want to buy again. It is “too expensive” in your mind. Evaluate it according to its potential rather than its past.
You only want to see the news you want to see. You only pay attention to those who say good words to X-loops. You cancel the attention and block anyone from “ful”. When you invest, find and study fud to see if it is valid.
Sinking cost deviation
Costs that have occurred and cannot be recovered. We tend to continue to invest more funds or excessive investment because we are afraid to lose their initial investment.
Loss is even worse than making money. People who have been to Las Vegas know what I am talking about. The feeling of winning +100 dollars is different from the feeling of losing $ 100. Lost is painful. A study showed that the brain usually distributes 2.5 times the loss to the loss. +250 = – $ 100
For example, when your investment fell 50% and there is more bad news. You can turn off the transaction and reduce losses. Loss dislikes means that some people prefer to wait for it. They are afraid of selling “compensation” money.
Loss to avoid risk avoidance. Some scams have appeared in DEFI. I saw some people vowed to invest in DEFI! The loss of losses means they will miss the harvest of changing life. Correct weighing risks and returns.
We overestimate the recent information and events. “The price of ETH is very bored. I want to chase the market value” “Then they are destroyed in the bear market. You can overcome the new growth deviation by changing the chart.
We overestimate your own ability. We have a few times and think that we are smarter than actual. The key to overrecoming excessive confidence is a reliable risk management strategy.
You have an emotional attachment to your portfolio. We give more value to investment because we have it. I saw a lot on Eth’s bigger. They have got huge benefits and become a unique moment. They ignore all other L1.
How to overcome the decision of the endowment effect zero basis. “If I don’t own this investment, will I invest today?” This makes your decision more neutral.
Brad Pitt moved to Los Angeles, which was a waiter before becoming a movie star. Many people follow his path, hoping to do this. You have never heard of thousands of other people have passed the same attempt and failed.
Someone turned $ 5.7 billion in SHIBA INU. You will not hear that thousands of people turn $ 8,000 into $ 500. Media prefer to report winners, which will distort your views on odds.
Human love stories will help us understand the world. Some parties explode because of this story. Remember last year’s GameStop? This is an revolution against Wall Street. People invest in narrative.
From the psychological deviation
Investors tend to follow and copy other investors practices. They are largely affected by emotions and instincts, not by their own independent analysis. If you have felt Fomo, it may be because of the psychology.
You make judgments based on the difficulty of remember information. After a major airplane crash, people will usually be afraid to fly. However, 1 of 9821 people died in a plane crash, and 1 person will die in a car accident in 114 people. In fact, the aircraft is safer.
In Crypto, the availability deviation occurs in marketing. A loop may be pulled off because it has good marketing. Marketing is very important, but make sure it does not cover a bad project.
The result deviation is a mistake made when assessing the quality of decision-making in the case of decision-making results already known. Imagine, use AA in the poker to pan with JJ (in this case, AA has 80% of the opportunity to win), then lose. You have made a great decision, but the result is very bad. You will invest 10,000 US dollars to the cottage currency, now worth $ 100,000. This has a good result, but this is a bad decision.
Another angle of the result deviation is, imagine, if the scene is replayed once. You must consider the difference. You can do everything right, and the result will not be right. this is life. But you should always make a decision with the best odds and probability.
This is the natural tendency we follow the leader. Once we believe that someone is an expert, we will believe everything they say.
How do you stop cognitive deviation? The following is some strategies I have to reduce cognitive deviation damage.
Develop a list of cognitive deviations.Whenever I make an investment decision, I will see my cognitive prejudice list.This makes me realize my thinking defect.Consider creating your own investment system.The formula can help you control your emotions.
Keep the transaction log.I preserved a Google spreadsheet that contains all my deals.In addition to financial data, I also wrote some of my arguments.If I quit in advance, I will write any questions I have encountered.By the way, I plan to create a free template for you.
Use cognitive deviation to play your own advantages.Understanding cognitive prejudices means you can profit from others.Currency with good narrative + attractive leader + marketing (availability deviation) + from the psychology.The more worship, the more likely it is profit.