Let's first talk about what contract trading is. Simply put, it’s like a 'game' predicting the price fluctuations of virtual assets, such as Bitcoin and Ethereum. Moreover, there’s leverage involved, like using 'little effort' to pry up 'big things', which can increase returns, but if you misjudge, the losses can be frightening.
In the field of contract trading where opportunity and risk coexist, trading psychology plays a key role in investor decision-making.
Let's talk about those psychological 'traps' in trading.
Fear psychology:
A Qiang opened a$BTC long contract position, and once the price suddenly dropped by 10%, he became extremely scared. Although it hadn't reached the stop-loss point, he hurriedly closed the contract. However, right after selling, the price shot up. This is fear making him panic, causing him to miss a profit opportunity. In contract trading, prices fluctuate like a roller coaster, and fear can easily lead to wrong decisions.Fear often causes investors to lose their composure when facing price fluctuations. The price of virtual assets is very volatile, compounded by contract leverage of 50x or 100x, and when faced with sudden reversals, investors usually cannot rationally analyze the market.
Greed psychology:
Due to his previous trading behavior, A Qiang was very unwilling. He again bought a long contract, making 300% profit, which had already reached his take-profit point, recovering earlier losses and even making a profit. He should have taken the profit at this point, but greed made him think he could earn more, saying 'just a bit more to close'... As a result, the market reversed; not only did he fail to close, but he kept increasing his position until he was liquidated. In this market, greed can make people forget about risk, failing to stop when they should.
Greed can trap investors in unrealistic fantasies, causing them to overlook risks and forget to take profits in a timely manner.Blindly following the crowd:
After two consecutive trading failures, A Qiang was severely impacted psychologically. He began to seek external information and joined various trading groups. Once in a group, a 'star analyst' shared a very niche cryptocurrency contract, and seeing many friends had purchased it, he bought it without any understanding, fearing he would miss the opportunity to get rich. The result was a pitfall, and the price plummeted, causing A Qiang to incur significant losses again.
The information in the virtual asset market is chaotic, and just following others can easily lead to pitfalls. A lack of independent thinking and blindly following others' actions is a common mistake many investors make.
Overconfidence:
After several trading failures, A Qiang began to work hard and actively learned trading knowledge. After a six-month refinement in the market, he suddenly felt like he had unlocked a vital pathway, becoming adept. A Qiang made several profitable contract trades, watching the funds in his account soar, and he often fantasized that the scene he envisioned was about to come true; he only needed to roll over a few more times and compound a few more times.
At this point, his mind began to swell excessively; he stopped watching market conditions, neglected risk management, and forgot the knowledge he had previously learned. He started trading heavily and frequently until he was liquidated again, at which point he realized his mistake. Unfortunately, it was too late. In contract trading, being overly confident often leads people to disregard risks.
Overconfidence in one's judgment while ignoring risks, believing one has a complete grasp of market trends, is also very dangerous. In contract trading, overconfidence can lead investors to overlook risk control, resulting in severe consequences.Hesitation psychology:
Facing losses, A Qiang still felt unwilling, working hard outside the market to earn money and accumulate funds, intending to make a comeback. After saving enough funds, A Qiang directly returned to the market, aiming to showcase his skills. This time, A Qiang became cautious, avoiding heavy positions and not exceeding 5x leverage, in short, taking profits when possible. Once, A Qiang discovered that a certain cryptocurrency contract seemed like it was going to rise in price, but he had never heard of this cryptocurrency, so he kept hesitating on whether to buy it. During this time, the price soared like flying pigs. By the time he decided to buy, the price had already risen significantly. He bought without hesitation, but right after purchasing, he encountered a price drop, making the trade very passive.
Hesitation often causes investors to miss the best opportunities. In the fast-paced environment of contract trading, hesitation can lead investors to miss the optimal timing to enter or exit the market.Missed opportunity anxiety:
A Qiang went through ups and downs in the market, sometimes seeing a cryptocurrency contract price continuously rising, which made him anxious. Even if he didn't understand, he couldn't resist 'shorting' it. He always felt that it wouldn't rise too much and would definitely peak soon, so he would try a small short position first. Later, it kept rising, but with ample funds, he thought it would definitely peak soon, trying to turn a bicycle into a motorcycle by increasing his position. However, such impulsive shorting often brings risks. The market queen is not something you can casually guess; the outcome of increasing positions can be imagined.
Missed opportunity anxiety makes investors fear missing any profit opportunities. Many times, this impulsive buying leads not to profits, but to risks.
In virtual asset contract trading, these psychological factors can easily lead us to make mistakes. We need to be clear about them, learn to overcome them, and solidify our trading knowledge, so we can walk steadily in the market.
If you really don’t know how to handle it? Then just create a mental representation: when faced with the choice between 'losing opportunities' and 'losing capital', firmly choose 'losing opportunities'. Maintaining capital is key to surviving in the market for a long time; only with safe capital can one seize the truly suitable opportunities.