Earning 50 to 300 makes you happy, but earning 1000 and then dropping back to 300 makes you collapse: this is the truth about profit drawdown.
Have you ever experienced this situation:
You only have 50 in capital, and after a few trades, it rises to 300. At that moment, you feel like the god of the market,
But if later it peaks at 1000 and then drops back to 300,
You won't be happy; instead, you'll feel extreme pain, even wanting to smash your phone and liquidate your position.
Why?
Because your mindset has shifted from "earning from 50 to 300" to "losing 700 from 1000."
The emotional damage from profit drawdown is more lethal than a margin call.
This is human nature: the mental account is quietly setting traps.
Behavioral finance has a concept called "mental accounting."
After earning 1000, your subconscious has already treated this 1000 as "yours," even if it's just unrealized profit; you start planning what you can do with this 1000, how much you can multiply in the next trade.
So when it drops back to 300, what you lost is not 700—what you lost is the future fantasy of the "path to wealth."
This is more lethal than losing money itself.
The larger the profit, the easier it is for drawdown to spiral out of control—because you start to get greedy.
When you earn little, you are very cautious because you fear losing everything;
When you earn more, you start to float because you feel your "skills have matured."
Then you begin to:
Not set profit-taking limits;
Double down on positions;
Heavy position based on gut feeling;
Treat "earning one more time" as a gamble in life.
Thus, a wave of profit drawdown directly wakes you up.
How to prevent profit drawdown from ruining you?
Here are a few practical suggestions; strongly recommend saving and reading repeatedly:
1. Set profit-taking ranges
For example, if you earn 300%, take profits in batches of 30%-50%, and never think about hitting the "top."
2. Treat unrealized gains as "other people's money"
Money that hasn't been truly pocketed doesn't count as yours. What you have is chips that the market can take back at any moment.
3. Set a maximum allowable drawdown percentage
For example, after earning 1000U, only allow a loss of 200U; beyond that, liquidate and adjust immediately.
In the end, you will understand:
In trading, the ones who truly survive are not the ones who earn the most but the ones who can keep the money they earned.
Turning 50 into 300 is growth;
Keeping 300 is capability;
Dropping from 1000 back to 300 and still being able to calmly review is mastery.
