Personality Test: Suppose you have a principal of 1 million, and you must lose it all within a week; if you exceed the time limit, you will be executed. What would you do?
1. Go all in, heavily bet on the direction
It seems like a quick all-in, but what if you win?
The principal doubles to 2 million, and the task of losing it becomes even harder!
2. Trade wildly and frequently
Open a position and immediately close it, slowly depleting the principal through transaction fees.
This does work, but what if some trades happen to be profitable?
Profitable trades must be closed at the first opportunity, you cannot wait!
On the other hand, losing trades can be held longer, hoping for a larger loss.
Think about it carefully, do these strategies resemble your daily trading behavior?
Worrying about giving back profits, eager to lock in gains;
Facing losses yet choosing to hold on, hoping for a market reversal.
So, essentially, you are using money to ultimately lose it in the market.