Let's suppose you got a $1,000 inheritance from your grandma (she never really liked you). Presuming that you have perfect information on them, which of the following investment opportunities do you think is the most appropriate to sink a $1,000 in:
On average, all of these have the same return but what's statistically the most favorable choice? You can choose c) and flip a coin, writing down the result; you double if you win, lose everything if you lose. Sounds fair? Try it out for a bit and see what happens. No matter how much of the $1,000 you invest, even if you only invest $1, you'll eventually enter a losing streak, start to become too aggressive with investments, swing wildly to recover, go all in and lose everything. This is what happens to the average investor.
The average investor that enters a losing streak starts what known in the poker community as "tilting", defined by Wikipedia as "a state of mental or emotional confusion or frustration in which a player adopts a less than optimal strategy, usually resulting in the player becoming over-aggressive." So, the investor that's in a losing streak all of a sudden wants to get it all back, risks everything and loses everything. The thing is, we're emotional beings and when our emotions get ouf of hand, we react before we get the chance to consciously think about the consequences of our actions.
To avoid tilting, you want to establish a strong and reliable habit of logging every investment you make. This will reveal trends and biases you make way before you've invested anything. It's only through becoming aware of these biases and trends that you can ever change them and make a significant improvement in your investment strategy. I found that knowing at every moment in time how much I'm ahead or behind helps tremendously in centering me emotionally.
For example, I'd use a balance sheet and simply write out losses and gains for a month, with a couple of comments at the end of each day, such as: "Wishful thinking isn't a legitimate investment strategy" or "Always bet on champions". Over time, I'll notice the same comments repeat, which will show these deep, subconscious trends in my investment behavior that are too fast to notice in daily life.
Note how this tactic turns losses into wins. Despite losing money here and now, I actually gain something over time, though it's not immediately apparent. How come? Losing tilts me, therefore bringing these negative and self-destructive emotional paradigms to the surface, where I can catch a glimpe of them before they dive back down. If you want to become a successful investor at any rate, you simply have to find a way to turn losses into wins. In my case, since I'm interested in studying my character composition, every cent I lose on investment is a successful investment too, one made in research of my own personality in realistic conditions. I honestly couldn't ask for a better win-win.