Author: VKTR
Compilation: Deep Tide TechFlow
This is not financial advice.
I've been holding an ETH position for almost two years, basically breaking even. It's like dead money, doing nothing. Like a zombie in my portfolio while other stocks in the market are racing past me.
The cursed chart
Now it's finally showing decent profits, but that doesn't change the fact that it might be one of the worst trades I've ever made. The reason is not the entry point or the investment philosophy, but because I couldn't let myself give up this trade and redeploy the funds to a more valuable place.
That's how a scarcity mindset manifests. I was so afraid of 'giving up' that I would rather watch my money do nothing for two years than admit I was wrong and look for a better opportunity.
This phenomenon is everywhere. Traders self-destruct not because they can't read charts or time entries, but because they can't make clear decisions about money.
I know a trader who made $2 million in the 2021 bull market. He lost it all by 2022. Another trader panicked and sold all his assets when the market first dropped 30%, then watched the price go up 50x while he kept holding stablecoins. Same psychological setup, different disaster.
Observe any trader long enough and you'll see the same pattern. They make a fortune and then undo it because they don't believe in their decisions. A 40% rally turns into a 20% loss because they hold on for too long. A 10x runner sells at break even because they don't believe it will keep going up. A trader who sells junk coins to zero will eventually panic sell the next runner because of the 'a bird in the hand is worth two in the bush' mentality.
I've experienced both of these situations. Not the diamond hands bullshit, not the paper hands panic, but I've seen enough good opportunities turn into regret to recognize the real pattern. Sometimes I hold on too long, sometimes I sell too early. The common thread isn't my strategy or analysis.
That's fear.
It's not conviction, it's not discipline, it's not belief in the technology.
Although it sounds a bit daunting, it may be childhood trauma.
The Invisible Cage
I think most trading mistakes are actually due to a scarcity of funds. Every 'hold the pain' tweet, every 'I sold too early' group chat message, indicates someone who grew up believing that such opportunities would not come again. Every trader who can't make clear decisions usually understood early on that money is scarce and precious, and it's best not to waste the few opportunities available.
Most traders I know grew up in middle-class anxiety, checking their accounts before buying anything. Parents would argue over bills. Every penny was precious because it might never come back.
This shit follows you into trading like a curse.
Imagine: you're up 40% on a trade. Your scarcity mindset kicks in. 'If I hold on a little longer, this money could change your life.' So you keep holding. And holding. Watching your gains evaporate because you can't accept that 40% is enough.
Or the opposite: you're up 40% and your scarcity mindset whispers, 'Take the money and run. You may never see green again.' So you sell it and watch it go up 400% while you hold cash and blame yourself for not believing in the setup.
Scarcity Thinking Chooses Financial Trauma over Financial Freedom
Both reactions stem from the same view: believing that opportunities are limited and valuable.
Behavioral economists have been studying this for decades. When you grow up under financial stress, your brain instinctively believes that every decision could be disastrous. Your childhood experiences are manipulating your trading account, and it's probably losing you money.
Abundance asymmetry
Meanwhile, there's another type of trader in these markets. They usually have money from an early age, or at least a stable financial situation. They make decisions without a care in the world. Hold positions when they're profitable, stop losses when they're unprofitable, and adjust positions accordingly. No emotional attachment, no vicious cycle of 'what if...'.
They sincerely believe that there will be more opportunities in the future, which many of us don't believe.
An abundance-minded trader thinks, 'I'll let this winner run and manage my risk appropriately. There will always be another trade.' A scarcity-minded trader thinks, 'This might be my only chance to achieve financial freedom, so I either lock it in immediately or let it go to zero.'
One approach creates wealth, the other creates anxiety.
Why Everyone Makes Bad Decisions
The most expensive lie in the crypto space isn't 'diamond hands' or 'always take profits', it's the idea that there's one right answer for every trade.
Really, I think we're just scared. Afraid of missing out. Afraid of making mistakes. Afraid that once we take the wrong step, there won't be another opportunity.
This phenomenon is everywhere. Those traders you might call 'optimizers' can't make clear decisions because every trade could change everything. They hold winning stocks for too long, which eventually become losing stocks. They sell winning stocks too early, eventually watching them go to ruin. They keep adding to their positions without managing risk. They treat every decision as irreplaceable.
They are trading childhood trauma, not the market.
The Real Cost of Narrow Thinking
A scarcity mindset affects not only your trading but your entire relationship with money and opportunities.
I once made 5x on a position but couldn't bring myself to take profits. I watched it slide all the way down to break even over three months because I was haunted by the fear of 'selling too early'. But I also panicked and sold a winning stock when it was up 30% and later went up 10x because my brain couldn't believe I deserved that wealth.
Scarcity thinking creates specific types of self-destruction:
Decision paralysis - you can't decide when to buy, sell or hold because every choice feels like it could ruin everything. You'll be helpless and unable to dynamically manage risk.
Binary thinking - you think every trade is either 'forever diamond hands' or 'take profits immediately'. You can't increase or decrease your position because you don't believe you can make multiple correct decisions.
Risk distortion - you either go all-in on one trade or don't take any meaningful risk. You can't find the middle ground where wealth is actually accumulated.
Abundance Secrets
The solution isn't necessarily psychotherapy or meditation, although I've found the latter helpful. The key is to convince your brain that money is a renewable resource, not a finite one.
Might as well ask yourself, 'What would someone with $10 million do in this situation?' I guarantee they wouldn't hold a stock until it drops 80% because they 'believe in the technology.' But they also wouldn't sell off the first 20% of a bull market out of fear of volatility.
Experienced large-cap traders don't get emotional about a single trade. They consider risk management and position sizing, not absolute returns. They prefer to make consistent decisions rather than pursue perfect decisions.
What actually works
I wish someone had told me these things five years ago, and those truly successful traders I saw did the same:
Consider all scenarios, not absolutes. Set multiple profit targets and risk levels before trading. Don't let scarcity thinking convince you that there's only one right way to do it.
Size your trades like you're already wealthy. If you had $1 million, would you risk 100% of it on one altcoin? Then why are you doing that with your $10,000 account?
Practice dynamic risk management. Take profits when you're up big. Add to your position when you're right. Cut your losses when you're wrong. Don't treat every decision as permanent.
Calculate opportunity cost. Every dollar tied up in an ineffective trade means you don't have the opportunity to profit elsewhere. Every dollar you panic sell means you could have compounded your gains.
The Compound Effect
An abundant mindset makes you more money than a scarcity mindset. Trying desperately to make every trade perfect usually leads to fewer good trades overall.
When you start thinking fully, you'll make better decisions. You'll take profits at the right time. You'll let some winners run. You'll stop losses. You'll wait for the right time. You'll stop revenge trading. You'll stop getting caught up in high-level narratives because you're afraid of missing out.
All these little decisions add up. Instead of getting caught up in the boom and bust cycle of scarcity trading, you start accumulating steady, consistent wealth.
The market rewards patience, discipline, and strategic thinking, and punishes desperation, greed, and emotional decision-making. Your mindset determines which category you fall into.
Breaking the Cycle
I still struggle with this. Even now, with a larger account and more experience, I sometimes find myself making decisions out of fear rather than logic. Scarcity thinking is deeply ingrained.
But I've learned to recognize it. And I've seen the same pattern in every trader who's gone from consistently losing to consistently profitable.
The first step is to recognize that your scarcity trap exists. It's not your fault - it's formed by childhood experiences dealing with money. But it's your responsibility to change it.
Heal and win
Your relationship with money was formed before you learned to walk, and every trade you make can potentially lose you money. The scarcity trap is poverty thinking disguised as strategy.
I've learned this the hard way. I've lost more money making those terrible decisions than I've lost making logical ones. I've turned winners into losers by overthinking more times than I've stuck to the plan.
I think this pattern destroys traders more than any bad technical analysis or market crash.
Your childhood experiences don't determine your trading fate. But you have to realize that your scarcity mindset is the real enemy. Not the market, not the whales, not the manipulation.
Your brain is breaking down and letting you keep breaking down.
Solve this problem first. Everything else is just strategy.
