Why do retail investors always lose more than they win?

In the world of cryptocurrency, retail traders often find themselves at a disadvantage, as if the game was unfair from the start. Behind this lies some brutal mechanisms that cause retail investors to repeatedly incur losses.

Imagine you are looking at the cryptocurrency order book, ready to place an order. Suddenly, a large number of buy or sell orders flood in, leading you to mistakenly believe that market demand or supply has changed. However, these orders may just be traps set by exchanges or large traders, mysteriously disappearing before execution. By the time you react, the market has already fluctuated according to their wishes, and your money has quietly slipped into their pockets. This is the magic of “phantom orders,” turning you into their prey without your knowledge.

Now let’s talk about “wash trading,” which is more like a grand show meticulously directed by the exchanges. They buy and sell the same asset through puppet accounts, creating a false illusion of market activity. You are attracted by this deceptive momentum or stability, eagerly joining the trading army. What’s the result? When their tricks come to an end, the price plummets like a kite with a broken string. The assets in your hands instantly depreciate, while they secretly laugh behind the scenes, collecting high trading fees. This is not investment; it’s outright robbery!

Don’t forget those cold-blooded algorithmic robots. They operate at super high speeds, able to capture information the moment you place an order and trade ahead of you. High-frequency trading and front-running have become their standard practices, while you can only watch your profits being ruthlessly snatched away. These robots not only manipulate the market at their will but also, to some extent, control the market direction. In such an environment, trading feels more like a contest against an invincible opponent, with slim chances of winning.

In summary, the world of cryptocurrency trading is filled with traps and challenges. As retail traders, we need to stay alert at all times, learn to recognize these brutal mechanisms, and avoid becoming someone else's prey. Remember, investing carries risks, and one must be cautious when entering the market!

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