Category: Money tips Release Date: 2006-11-16
Capital management is crucial in the futures trading. It can be said to see the success of Quotes is only half the deal, if there is no scientific capital management strategy, and success often will be missed. Many traders believe in a "limited degree of losses, an infinite degree of profit" funds management principles, however, the fact the contrary, they treat the gain or loss when the futures position mentality is different: only the surplus is always simple, stop-loss is always difficult !
A psychological experiment inspired by
Why are only the surplus is always simple, stop-loss is always difficult? The answer comes from the psychological. To understand this problem, we look at a frequently used psychological test. Imagine you answer the following questions:
600 people were infected with a deadly disease, there are two drugs available for the following options:
(A) could have saved 200 lives.
(B) 1 / 3 probability that can cure all, 2 / 3 probability of a rescue is also not live.
You choose what kind of medicine?
Choose A Are you sure that you can save 200 people, choose the B you want to bet on how many people can save. Therefore, this choice is easy: 72% of the respondents selected A. Because you are afraid to bet on how many people you can save.
Here is another question:
600 people were infected with a deadly disease, there are two drugs available for the following options:
(A) certainly caused 400 people to death.
(B) 1 / 3 probability that can cure all, 2 / 3 probability of a rescue is also not live.
You prefer killing 400 people? No, there is at least saved the lives of all possibilities. On this issue only 22% of people choose A.
This interesting experiment by Kahneman and Carlos Tevez in 1981, the first design based on the fact these two problems are identical, but some differences in the expression of only. The first focused on the proceeds, while the second focused on the losses. The two scientists used this and other similar issues have been the following conclusion: that people's attitude for gains and losses is not the same, namely:
People are more willing to gamble rather than loss of earnings.
Let's look at how the application of these conclusions in the futures market. Investment gains and losses are common, assuming you hold futures positions have been at a loss, how do you do? You will most other people, betting that it will one day would "carry back (that is, Fukui variable floating profit or loss reduction)." Now suppose that you hold futures positions have been profitable, this time you will not bet, and that your approach is very simple: only an immediate profit, off the bag for security. This "only the surplus is always simple, stop-loss is always difficult," the phenomenon of violation of a "limited losses, an infinite degree of profit" principle, after long-term trading operations, led many investors to the funds account for an increasingly shrinking, Even more frightening is that, due to a loss of one or two large carry do not come back, resulting in funding shortfalls almost.
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