"Shanghai Securities News": Why is frequent operation a bad investment habit
Hao Xuguang
(Source: "Shanghai Securities News"2019-12-30 ）
Human behavior under cognitive dissonance is quite complex. The value of cognitive dissonance theory lies in helping us predict how prone people are to change their attitudes and behaviors. The greater the cognitive dissonance, the greater the stress. However, the way to eliminate cognitive dissonance is not to recognize the value of this behavior more, but to change the attitude towards this behavior and then resolutely change this behavior.
“Why is w88 online live casino so difficult to change behaviors such as frequent operations, chasing up at high prices, and selling down at low prices? Why do investors rarely stop losses when stocks they buy with heavy positions fall? But w88 online live casino is easier to stop losses in time when stocks are light? Cognitive dissonance in psychology provides an explanation for the confusion encountered almost every day in investment.
What is cognitive dissonance? That needs to start with attitude.
Attitude is an evaluative statement about people and things. w88 online live casino reflects the feelings about people and things and is directional. An attitude must have an attitude subject (attitude holder) and an attitude object (attitude object). Attitude has three basic components: cognition, emotion and behavioral intention.
The cognitive component refers to the subject's psychological impression of the attitude object, which is the basis for the rest of the attitude. w88 online live casino includes relevant facts, knowledge and beliefs, that is, the knowledge, understanding, evaluation of people and things, and narratives with evaluative meaning. The affective component is the emotion or feeling part of the attitude, with emotional overtones and emotional characteristics such as likes and dislikes. The emotional component is the core and key of attitude. Attitude and emotion cannot be equated, but attitude contains emotional tendencies, and emotion can directly reflect attitude. The behavioral intention component refers to the individual's intention to act on the attitude object in a certain way and the response he is prepared to take. Attitude is different from behavior, but attitude contains behavioral tendencies.
Generally, the three components of attitude are consistent, but they may also be inconsistent. Research shows that people will automatically seek consistency between various attitudes and between attitudes and behaviors. This can show that one is rational, and showing that one is rational is an important pursuit of modern people.
20In the late 1950s, the famous social psychologist Leon Festinger proposed the "cognitive dissonance theory". Cognitive dissonance refers to an uncomfortable state in which individuals recognize that there are inconsistencies between various attitudes that are important to them, and between attitudes and behaviors. Any form of inconsistency will cause psychological discomfort, and the parties will try to eliminate this imbalance, reduce and eliminate the discomfort. At some point, cognitive dissonance is inevitable. Festinger believes that whether people have a strong desire to eliminate cognitive dissonance depends on three factors: the importance of the factors causing the dissonance, the extent to which the individual believes that they are controlled by these factors, and the extent to which the individual benefits from being involved in the dissonance.
If the factors causing the dissonance are not that important, people often don't care. For example, "Zhang San doesn't like to eat fish, but he bought a fish for lunch." w88 online live casino is a bit of cognitive dissonance, but w88 online live casino is not significant and does not necessarily need to be eliminated. But if the factors causing the disorder are very important, for example, Li Si firmly does not approve of touching other people's things without their consent, but he was hungry when he was traveling in the suburbs. Should he pick the cucumbers in the vegetable field next to him? Moral pressure forces him to resolve this imbalance. Either continue to be hungry, or pick without regard to moral constraints, or find a suitable explanation and think that sometimes picking other people's cucumbers when you are hungry is nothing.
So, behavior under cognitive dissonance becomes quite complex. Having cognitive dissonance does not mean that actions must be taken to restore balance. The value of cognitive dissonance theory lies in helping us predict how prone people are to change their attitudes and behaviors. Although the specific situation will be complex, w88 online live casino is at least certain that the greater the cognitive dissonance, the greater the stress and the greater the desire to eliminate the imbalance. Generally speaking, w88 online live casino is difficult to change behavior, but w88 online live casino is relatively easy to change attitude. For example, smokers also know that smoking is harmful to health, but how many of them can make the determination to quit smoking?
There are many factors that affect cognitive dissonance. Today, the author focuses on two points: personal responsibility for the consequences and whether the individual has made great efforts. Because these two points are closely related to stock investment.
When investing in stocks, why do behaviors such as "frequent operations, chasing the rise at high positions, and selling the decline at low positions" occur repeatedly? Investors are very aware of the need to take care of their own profits and losses, and realize that they must be responsible for all investment consequences, regardless of whether this sense of responsibility is logical or not. Moreover, regardless of whether these consequences can be reasonably foreseen, once behaviors such as "frequent operations, chasing up at high levels, and selling down at low positions" are repeated, and w88 online live casino is discovered that this operation has brought about negative consequences (this is almost inevitable), imbalance will occur.
Some scholars have found that as long as the subjects believe that they chose the task, even if they do not discover the negative consequences until after completing the task (for example: a pure waste of time), they will still give a better evaluation when they evaluate the boring task again. The goal is to reduce dissonance. Other scholars have explored the reason: people make internal attributions for their actions and believe that they should be responsible.
Investors participate in investments voluntarily, and operational errors often lead to imbalances. What will he do at this time? According to the author's interviews and research over the years, most investors do not admit that frequent operations are a bad operating habit. Looking for reasons, many investors use this freely. For example, this way they at least accumulate experience: How can you make profits without frequent operations? Only by operating can you make a profit. Where are the profit opportunities if you don’t chase the rise? w88 online live casino can be seen that w88 online live casino is difficult to change behavior and w88 online live casino is difficult for investors to change improper operating habits. This is also an important reason that hinders many investors from improving their operational skills.
If an individual works hard to do a worthless thing, he will reduce the dissonance by increasing his enjoyment of the thing. The survey found that when investing in stocks, most of the stocks purchased with heavy positions have been carefully considered. If they do not rise but fall, w88 online live casino will bring negative results. Because this operation was carefully calculated, the degree of imbalance is very high, and the desire to eliminate the imbalance is naturally very strong. The way is to speak highly of this operation. Therefore, if a heavily purchased stock does not rise but falls, w88 online live casino is often not easy to stop the loss. Relatively speaking, stocks purchased with light positions may not necessarily be carefully considered before making decisions. Therefore, once a decline occurs and brings negative consequences, the degree of imbalance is relatively small. Therefore, if you dare to admit your mistake, you will often stop the loss and exit immediately.
How to overcome these bad operating behaviors? According to the idea of eliminating dissonance, w88 online live casino is to change attitudes from a cognitive perspective and make attitudes consistent with behavior. Any operation, even if w88 online live casino is a short position, should be carefully considered. Once a mistake is made, the desire to eliminate the imbalance will be stronger because of personal efforts. The way to eliminate dissonance is not to recognize the value of this behavior more, but to change the attitude towards this operation and resolutely change this operation behavior.
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