The Truth of Trading: Retail Investors Losing Money Is Not Due to Direction

People often ask me: "If I clearly see the trend, why am I still losing money?"

The heart-wrenching truth: It's never the direction that kills retail investors, it's the position size.

The two main pitfalls for retail investors:

Not daring to hold when the trend is favorable: When the market rises, they rush to exit after making 5%, missing the major uptrend and getting washed out early; holding onto losing positions against the trend: They refuse to cut losses when the market falls, instead doubling down and trying to catch the bottom, bleeding while doing so, ultimately questioning their life choices.

The difference between skilled traders and retail investors lies in position size.

When retail investors over-leverage, their mindset is thrown into chaos—afraid of pullbacks when the market rises, fearing liquidation when it drops; skilled traders maintain light positions, seeing volatility as an opportunity:

Market down? They still have bullets to buy more, averaging down their cost; market up? They are already in profit, their mindset as steady as a rock.

The essence of position management: Surviving longer.

It's not about making you richer, it's to ensure you don't exit the market before it “gifts” you opportunities. As long as you survive long enough, a big trend will eventually come knocking on your door.

Here's a real trading example:

Last year, my follower Xiao Wang was bullish on BTC but exited after making 3%, only to miss a 30% major uptrend. Later, I taught him how to adjust his position size:

Trend trades: Open a position with 10% of capital, set a stop loss at 2%, lock in half profit after gaining 8%; adding positions: After the market breaks key levels, use 50% of profits to add to the position, keeping the original capital unchanged.

Last week, when BTC broke through $28,000, he made $4,000 in three days using this method, without losing a dime of his original capital.

Stop getting entangled in whether the “direction is correct.”

The direction is provided by the market, the position size is managed by yourself.

When you truly understand the moment of “testing the waters with light positions and following trends with heavy positions,” your account curve will change from “straight down” to “steadily upward.”

Want to learn systematic position management methods? Follow me at @加密大师兄888 —I'll teach you step by step how to use position size to “extend your life,” from water testing ratios to timing for adding positions.

After all, in trading, those who survive longer can smile until the end.