In financial trading, especially in the crypto market, many people often blame incorrect technical analysis, entering trades at the wrong time, or unexpected news when they incur losses. But the truth is different: most account 'burnouts' do not come from the chart, but from the trader's own psychology.
Psychology Determines Winning or Losing
A study from Barclays Wealth shows that:
60% of failures in investing/trading stem from uncontrolled emotions.
New traders often tend to increase their order volume by 2-3 times after losing in order to 'recover capital'. As a result, in 75% of cases, they lose even more.
This shows that it is not a lack of knowledge or wrong methods, but the inability to control emotions is the biggest cause.
A Typical Example
In 2021, a trader (referred to as A) had 10,000 USDT in his Binance account. He lost his first futures trade with a loss of -1,000 USDT. Angry, A decided to 'recover' by entering the next trade with 50x leverage, doubling the volume.
In just 15 minutes, a reverse move of 1.5% wiped out the remaining 9,000 USDT.
The mistake was not in the analysis, but in allowing emotions to dictate actions, breaking down the entire capital management discipline.
Why is Psychology So Dangerous?
The market does not care whether you are happy or sad. But emotions will make you press the wrong button.
When feeling euphoric, traders easily increase volume and leverage while forgetting to manage risk.
When angry or wanting to recover, traders will go all-in without reassessing the situation.
When afraid, traders easily take profits too early, missing out on significant gains.
All of this makes the advantage of technical analysis meaningless.
How to Manage Psychology in Trading?
Only trade when in a stable mood.
If you are tired, stressed, or have personal issues, it's best to stay away from the market.
Have a 'rest rule' after a series of losses.
After losing 2-3 consecutive trades → Stop trading for at least 24-48 hours to 'reset' your psychology.
Practice emotional control.
Meditate for 10-15 minutes each day, or do light exercise to clear your mind.
Keep a trading journal.
Record your feelings before - during - after the trade to identify bad habits.
For example: “This trade was made out of anger after losing” → Identify and gradually correct.
Always have a plan before trading.
Clearly identify: Entry point - stop loss point - take profit point - % risk.
Once you have a plan, just follow it; do not change it halfway due to emotions.
✅ Conclusion
In trading, psychology is the biggest enemy. Knowledge and analysis are only 50% of the journey; the other 50% is the ability to maintain discipline and manage emotions. To survive long-term, train yourself to be a 'discipline machine' instead of letting emotions dictate the fate of your account.
