I added to my position again: The psychological mechanism of stop-loss and self-destructive impulses
“I know I shouldn’t add to my position, but I did it anyway.” This sentence has been uttered by almost everyone in the cryptocurrency world. The psychology behind it is actually a self-destructive gambler’s mentality: the more you lose, the more you want to “bet one more time” to turn the situation around, even if deep down you know it is likely a trap.
You are not investing; you are seeking emotional balance. Because as long as you don’t add to your position, you have to admit you were wrong; as long as you don’t take action, you have to face the helplessness of losses. But once you add to your position, you “regain control,” even if it is an illusion. Thus, you keep adding to your position, averaging down, getting deeper and deeper; this is not a strategy, but an emotional compensation.
Why is it so hard to stop-loss? Because it means admitting that you made a wrong judgment. Many people would rather lose money than face the painful reality of their self-perception being denied. This is actually a “cognitive defense mechanism” trying to preserve the inner self-esteem of “I’m not that bad.”
But in the cryptocurrency world, real growth begins with “being able to stop-loss.” When you can ruthlessly admit your mistakes and cut your losses to survive, it indicates that you have detached from the gambler’s mindset and are on the starting point of becoming a rational investor.
Remember this: it’s not about adding to your position that shows courage; it is those who dare to stop-loss that truly hold the initiative.
