Whether trading cryptocurrency contracts or futures contracts, nearly every trader has experienced 'holding on' — clearly having bought in the wrong direction, watching their money dwindle day by day, yet reluctant to sell, eventually watching all their funds disappear. This situation is all too common in the market. It's not about bad luck; it's primarily due to our miscalculations and misunderstandings of the rules, combined with the market's temperament, which together create these troubles.
First of all, no one wants to admit a loss, and this is the main reason. For example, if you bought a Bitcoin contract hoping it would rise, but it falls instead, and your account starts to decrease. At this point, you might think: 'If I sell now, that money will really be gone; maybe I should wait, it might rise back tomorrow, and I can still make a profit.' It's like buying a piece of clothing, getting home and finding it doesn't fit, and the store says it can be returned but with a deduction. You always think, 'Maybe I can wear it later,' but it ends up collecting dust in the closet, and eventually, you have to throw it away. I had a friend who waited while Bitcoin dropped 5%, and even though he was already down 20%, he still held on. As it continued to drop, he regretted it only after he lost almost everything.
Secondly, many people don't understand how dangerous 'leverage' can be. When trading contracts, you can use leverage, for instance, 10x leverage means that if the market rises by 10%, you can earn 1x; but conversely, if the market drops by 10%, you may lose all your funds. However, many only focus on 'how much can I earn,' completely ignoring that the risks are also magnified. They think, 'What's there to fear if it drops a little? Just hold on and it will pass,' forgetting that leverage acts like a magnifying glass, turning minor fluctuations into significant losses. It's like trying to burn paper with a magnifying glass; a small flame won't ignite it, but magnified, the paper can burn up instantly. The same principle applies to your principal.
Finally, some people who have previously held on and succeeded believe they can do it every time. For example, there was a time they bought in the wrong direction, held on for a few days, and the market really reversed, earning them money. After that, they thought, 'Holding on is correct; it worked last time, so it should be fine this time,' slowly disregarding the importance of 'setting a stop loss time.' But how can the market always follow your wishes? If an unexpected situation occurs, such as a new policy being released or large funds suddenly dumping, the price could collapse instantly, and by the time you think of selling, it might be too late, leading to immediate liquidation.
In short, holding onto a position means not wanting to face the fact that you've lost money, while liquidation is the market's lesson for this 'avoidance.' Trading contracts is not about betting on who can hold out until the end, but rather about managing risk properly. Don't always think 'I can make back my losses'; cut losses when it's time to cut losses. Don't view leverage as a tool for quick profits, and don't assume your luck will always hold. This way, you won't end up suffering significant losses in the market.
To break the habit of holding on, it really isn't just about 'resisting.' You need specific methods to keep track of yourself, preparing well from before trading, during trading, and after trading, and gradually, you can form a habit. Let's break down several key steps in simple terms; following them will definitely work.
First, before trading, set your 'stop loss line' firmly, as if installing a 'safety valve' for your account. Don't wait until you've bought a contract to ponder 'how much to sell at a loss.' Before placing an order, you need to clearly think: how much loss can I accept this time at most? For instance, if you have $10,000 in your account, you could set a rule: 'If I lose $500, I will sell immediately,' and then set the automatic stop loss directly in the trading software. It's like setting an alarm before leaving the house; when the time comes, you must go, and don't leave room for 'just a little longer.' I had a colleague who always set stop losses before buying contracts; even if the market later rebounded, he didn't regret it — because he knew that if he hadn't set the stop loss, and the market dropped significantly, the losses would be much more than $500.
Secondly, in trading, don't keep staring at the screen and 'self-brainwash' yourself; cut losses when necessary. Many people hold onto their positions because they constantly watch price fluctuations after the market opens. When they see prices drop, they comfort themselves with 'it will rise soon,' and the more they watch, the less willing they are to sell. In fact, you can set a rule for yourself: once you have set a stop loss, exit the trading software, focus on your work, eat when it's time to eat, and don't keep staring at the screen. Even if you want to check occasionally, don't exceed 5 minutes. Just like when you're dieting, don't keep staring at the cake in the fridge; the more you look, the more you want to eat. Out of sight, out of mind, which helps you stick to your limits. If it truly reaches the stop loss line and the software automatically closes the position, don't get tangled up in 'should I buy back?' Take a half-hour to calm down, think about where you went wrong this time, and then decide on the next step.
Finally, summarize after trading and note down the 'holding on traps.' After each trade, regardless of whether you made a profit or a loss, spend 10 minutes writing a short note: Did you hold on this time? Why did you want to hold on? If you did hold on, how much did you lose? If you didn't hold on, was it because you set a stop loss? For example, if you didn't set a stop loss last time and held on, losing $2,000, make a note saying 'next time, I must set a stop loss; otherwise, I will incur significant losses again.' Gradually, you will find that holding on always leads to greater losses, while adhering to stop losses helps preserve your principal. It's like a student organizing a workbook of mistakes; by noting down the wrong questions, you won't make the same mistakes next time.
In fact, developing a habit of not holding onto positions is fundamentally about 'not competing with the market.' If you set rules in advance and follow them, even if you occasionally lose a small amount, it's better than holding on until liquidation. At first, you might feel it's a 'pity,' but after trying it a few times, you'll find that by sticking to your stop loss, the money in your account can gradually accumulate, rather than having to start over after repeated liquidations.
