After years of navigating the cryptocurrency market, I have observed that many retail traders often fall into a typical trap: they tend to stubbornly hold onto losing positions, while being eager to close out when they start making a profit. They do not pay attention to the broader market trends or changes in trading volume, only caring about whether their account balance is positive or negative. This approach often leads to rapid accumulation of losses, while the profits gained are negligible.

Change Strategy: Let Profits Run, Cut Losses Timely

To break this pattern, the key is to adopt the opposite strategy: hold onto profitable trades while immediately cutting losses once a predetermined loss limit is reached. I follow a simple stop-loss and profit-taking strategy as follows:

When your profit reaches 15%, set a 10% trailing stop loss. If the market price retraces, causing your profit to drop to 10%, then sell to lock in that portion of the profit.

If the market price continues to rise, let it keep rising— the longer you hold, the larger the potential profit space.

On the other hand, if the price starts to drop, once your loss exceeds 5%, sell immediately. Do not let emotions affect your decision-making— exit the trade decisively.

Why This Strategy is Effective

As long as you ensure that you always have at least a 10% profit while keeping each loss under 5%, you only need 50% of your trades to be profitable to maintain overall gains. In the long run, if you make 100 trades, as long as half of them are profitable, you can achieve your profit goals. This strategy helps you maintain stable profits in the market while avoiding significant losses due to emotional decision-making.