Lately, I've been thinking about a classic problem in investing and trading. Everyone has heard Warren Buffett's famous quote — "Be fearful when others are greedy, and greedy when others are fearful." It sounds simple, but actually executing it in trading is a matter of life and death.

I've personally experienced this dilemma. Sometimes, after a trade makes a profit, I start to get nervous, fearing the gains will disappear. I hurriedly take profits and exit, only to see the market keep rising, making me regret missing out on more. Then, another time, I decide to let the profits run and refuse to take profits, only for the market to reverse and wipe out my gains completely. At that point, I start blaming myself for being greedy — human nature is really terrible.

Most retail traders swing between these two extremes. Buying at relatively low levels, then when the price rises to a profitable point, the market begins to correct — should I exit? Everyone has different opinions. If I exit and the price goes higher, I regret being so timid; if I stay and the price continues to fall, I regret not taking profits in time. Everyone can be a hindsight expert, but when the moment comes, we often follow the crowd’s fear or greed — just like everyone else.

There are four typical behaviors of unsuccessful traders. First, taking profits quickly and cutting losses early — driven by fear of giving back gains or expanding losses. Second, adding to losing positions, hoping the market will reverse — a gamble fueled by fear. Third, blindly chasing the trend, buying high and selling low, following the crowd without clear judgment. Fourth, over-leveraging — putting too much capital into a single trade. The first two stem from fear, while the latter two are driven by greed. These approaches might occasionally win a few trades, but that’s just luck; in the end, they usually lead to big losses.

The key is to have a trading system. The rules are simple but crucial: cut losses quickly, let profits run. Have clear standards for entering and exiting trades, and a well-defined capital allocation plan. Follow the rules strictly — don’t follow the crowd’s fear just because others are scared, and don’t follow their greed just because others are greedy. A good system helps filter out many emotional decisions.

Human society has evolved from agriculture to industry to information technology, but human nature has remained unchanged for thousands of years. However, individuals can evolve. Professional traders improve through continuous reflection and practice, gradually overcoming their inner fears and greed, ultimately becoming market winners. Most people spend their lives battling their own human weaknesses.

We can also think in reverse: use tools to analyze the prevailing psychological state of investors in the market. When others are fearful, check what indicators say; when others are greedy, be alert to risks. This can help us reduce the influence of emotions on our decisions. The most important thing in investing is to respect the market, view your position rationally, and gradually refine your trading understanding within a scope you truly comprehend and control. Don’t expect to have an epiphany overnight — instead, evolve yourself step by step through repeated practice.