Many people have heard Warren Buffett's famous quote: "Be fearful when others are greedy, be greedy when others are fearful." It sounds very reasonable, but in actual trading practice, it's a different story.

I often see such situations happen. One day, when holding a position with profits, the mind starts to panic, fearing the profits will be given back, so I hurriedly take profits to lock in gains. As a result, the market soars, and I watch helplessly as the profits that should belong to me drift further away. Another time, with a profitable position, I decide not to take profits and let the profits run, but then the market adjusts, and all the profits are wiped out. At this point, I start blaming myself for being greedy.

This is actually the most common dilemma in trading. When the market rises from a low point to a profitable level and then begins to correct, we face a tough choice: exit now or hold on? Everyone has different answers, and after the fact, everyone regrets differently. If you exit and the price rises again, you’ll say "I knew I shouldn’t have been afraid"; if you don’t exit and end up losing, you’ll regret not taking profits at the high.

Ultimately, many retail investors and beginners only realize this in hindsight, and even if given another chance, it’s hard to judge precisely. Because in the market, the mentality is often tense, and rational judgment becomes a luxury. Some are overly greedy, others overly fearful, and in the end, it’s all a futile effort.

I’ve summarized four typical behaviors of unsuccessful traders. The first is taking profits quickly and exiting, and cutting losses early—this is fear at work, afraid of giving back profits and also afraid of losses expanding. The second, more dangerous, is increasing positions after a loss, holding onto the hope that the market will reverse, which often results in bigger losses. The third and fourth are manifestations of greed: chasing after rising prices, selling during declines, blindly piling in and following the crowd, lacking any plan.

These approaches might occasionally bring some short-term gains, but mostly it’s luck. The final result is usually significant losses. Those who truly survive in the market all have their own trading systems, following logic like cutting losses and letting profits run, with clear rules for entering and exiting, and plans for capital management. Most importantly, they strictly adhere to these rules. Only then can they truly overcome the psychological struggles caused by greed and fear.

Interestingly, human society is constantly evolving—from agriculture to industry to the information age, material life becomes richer, and technology changes the world. But one thing that hasn’t changed for thousands of years is human nature. However, this isn’t absolute; individuals can evolve. Professional traders, through practical experience and reflection, have conquered their inner fears and greed, ultimately evolving themselves into market winners. Most people, on the other hand, spend their lives battling their own weaknesses.

Since human weaknesses are hard to overcome, we can think in reverse. By analyzing the common psychological states of market investors and using tools to understand the greed index of the market, we can actually reduce our own risks. The most important thing is to respect the market, view it rationally, and continuously improve our trading understanding within a controllable scope with a plan. This is the way to survive long-term.