We've all heard Buffett's famous words: "Be fearful when others are greedy, be greedy when others are fearful." It sounds simple, but in practice, it's incredibly difficult.

Recently, I’ve been reflecting on my trading records and discovered an awkward truth: most of the time, I can't really tell whether I am in fear or greed. Sometimes, seeing profits on my account, I rush to take profits and lock in gains, only to see the market surge further, missing out on a big chunk of potential profit. Other times, I stubbornly refuse to take profits, hoping to let the gains run, only for the market to reverse and wipe out my profits instantly, making me blame my own greed.

This is the most common dilemma in trading. In markets like stocks, futures, and forex, when you buy at a relatively low point and the price rises to a profitable level, the market suddenly adjusts. Should you sell or hold? Opinions vary widely, and no one can give you a definitive answer. If you choose to exit and the price then rises again, you'll regret it; if you choose to hold and the price drops, you'll blame yourself for being so greedy.

Honestly, most retail investors and beginners are armchair strategists in hindsight. Even if they had a second chance, it’s hard for them to accurately judge when to be fearful and when to be greedy. Why? Because in the market, people are often tense, unable to make rational decisions. During trading, many are either overly greedy or overly fearful, ultimately wasting their investment and playing themselves out of luck—this all stems from poor psychological control.

I’ve observed that unsuccessful traders usually exhibit four typical behaviors. First, they take profits quickly and cut losses early—driven by fear, afraid of giving back gains or admitting losses. Second, they add to losing positions, holding onto hope that the market will reverse, often resulting in even bigger losses. Third, they blindly follow the trend—buying when prices rise and selling when prices fall, with no plan. Fourth, they go all-in, putting all their chips into one trade.

The first two are driven by fear; the latter two by greed. Sometimes, these approaches can bring some quick wins, but that’s often just luck, and eventually, they’re likely to suffer significant losses.

The real solution is to establish a trading system. The true meaning of Buffett’s "be fearful when others are greedy, be greedy when others are fearful" isn’t about blindly going against the crowd, but about having clear trading rules. These rules should align with the positive logic of "cut losses short and let profits run," with well-defined entry, exit, and capital management strategies, and strict adherence to them. Only then can you truly overcome greed and fear.

Interestingly, despite humanity’s development from agricultural civilization to information age, with material life becoming richer and technology advancing, one thing has remained unchanged for thousands of years: human nature. However, individuals can evolve. Professional traders, through practical experience and reflection, have conquered their inner fears and greed, ultimately transforming themselves into market winners. Most traders, however, will never overcome their own human weaknesses.

Since human nature is hard to change, we can think in reverse. By using tools to analyze the common mindset of market participants, we can reduce our own risks. At all times, investors should respect the market and view its conditions rationally. Planning to overcome personal weaknesses within familiar and controllable boundaries, and continuously improving one’s trading understanding—this is the true meaning of "be fearful when others are greedy, be greedy when others are fearful."