The Struggle of Long Short Term Profits - Psychology of Coin Trading 2 I noticed that in the previous issue, everyone was very interested in the psychological analysis after stepping out of the air. Today, Big Lion Brother's Coin Trading Psychology Classroom will hold another session. Explain why people are overly sensitive to short-term profits and lack imagination about long-term returns Have you not held coins with returns of over 100 times? Do you often buy good items at a low price but sell them early? Why do some elderly people in the cryptocurrency industry have been in the industry for N years, but now they don't even have any Bitcoin in their hands, missing out on the biggest time dividend? Psychologically speaking, this is a classic problem of behavioral psychology and cognitive bias, mainly stemming from the following psychological mechanisms and evolutionary backgrounds: 1. Instant satisfaction of preferences (Present Bias) Humans are naturally inclined towards immediate rewards, which may be overlooked even if the long-term benefits are greater. Psychologists refer to this tendency as Present Bias, which explains why we often choose "small and fast" rewards over "large and slow" ones. 🧠 Example: Knowing that sticking to fitness for a year can make you look better, but still choosing to use your phone tonight. Behind this preference is humanity's natural aversion to the uncertainty of the future - 'the future may change', but the rewards of the present are certain, and certainty itself is attractive. Frequently seen performance: --Although this project may seem like a big deal, it will take many days to complete. Someone else has sent a message, so I'll go ahead and make up for it later. --Although Alpha is a steady cash giver, I should stick to it every day (for a few minutes). I'd better open the King/lol/brush a Tiktok first. ~~~~~~~~~~~ 2. Loss Aversion According to Prospect Theory, people typically feel a stronger sense of loss than an equivalent gain (about twice as much). Therefore, the anxiety caused by short-term floating losses or "missed profits" often outweighs expectations of possible future gains. 📉 For example, if a person earns $1000 less today, they will have a more emotional reaction than they expected to earn $2000 more a month later. Frequently seen performance: --The fundamentals of this coin are good, and the position of the position is also good. I earned $1000 already, but now I have made a correction and only earned $800. Forget it, hurry up and settle for safety. Then this coin skyrocketed tenfold, and if you hold onto it, you can earn 800000, causing your thigh to break. ~~~~~~~~~~~~~~ 3. Limitations of imagination+abstract anxiety Long term returns are usually abstract, dependent on deduction, and uncertain, while human imagination is inherently limited to the scope of "perceivable" and "short-term experience". 🔍 For example: You can clearly imagine eating delicious Lamian Noodles tomorrow, but it is hard to really "imagine" the 1 million yuan in your account when you retire 10 years later. This abstract anxiety makes us naturally indifferent to long-term planning, unless there are strong visual tools or social reinforcement mechanisms. Frequently seen performance: --We are very concerned about the performance of Bitcoin in the coming hours, days, or even weeks, but indifferent to its performance in years or even decades. I asked most people around me, and in fact, many people think that Bitcoin is likely to go down to 5 million RMB in ten years, but few have really started taking measures for this forward return, such as investing regularly or providing Bitcoin based insurance for children/elderly people. ~~~~~~~~~~~~~~ 4. Evolutionary perspective: survival first vs long-term optimal Human ancestors evolved in a primitive environment full of danger and scarce food, and being highly sensitive to "resources available now" is an adaptive mechanism - waiting too long may result in starvation or missing breeding opportunities. 🧬 That is to say, pursuing short-term gains was once a survival advantage, not a flaw. But the rule of "delayed gratification" in modern society conflicts with primitive instincts, and our instinctual mechanisms have not evolved fast enough with the pace of civilization. In the cryptocurrency industry, most tokens are like air, and the phenomenon of them returning to zero after being held for a little longer makes it difficult for many people to grasp the balance between short-term and long-term benefits. Because 'one day in the cryptocurrency circle, one year in the human world', using traditional days, weeks, months, and years as measures of short-term/long-term is not very appropriate. ~~~~~~~~~~~~~~ My current personal experience is: For BTC as a target, I force myself to consider and operate at least half of my positions based on the 10-year perspective. For targets such as BNB/SOL/USDC, the time is 3-5 years. I used to consider ETH based on 5 years, but now it is only seen as a short-term trading target. For other value coins with fundamentals and profit models, such as the recently popular Kaito Virtual, which has a lifespan of 1-2 years, it mainly depends on whether their main narrative has the potential for long-term survival, whether it can attract attention and become the leader of Dragon One. For meme coins, except for DOGE PEPE, the longest duration is basically 2 months. In my opinion, investing is actually very against human nature. Most of the time, making decisions is a struggle against the natural instincts of human nature, but it is not simply a simple approach of "not going to places with many people, being afraid of others' greed, and being afraid of others' greed". Understanding one's own and most people's innate instincts and achieving 'I predicted your prediction' at some important decision-making points is enough, there is no need to pursue the extreme. After all, if you can outperform most of your competitors in the trading market and accumulate a few more times, you will be the big winner. I hope everyone can be helpful. If you find it useful, please don't hesitate to like, comment, and share. I will continue to conduct psychological analysis on some popular behaviors in the cryptocurrency circle.