1. The illusion that 'the market is always predictable'.
- Trap: Over-reliance on technical indicators or historical data, believing that short-term price fluctuations follow fixed patterns.
Risk: The cryptocurrency market is highly influenced by sudden news, emotions, and whale manipulation, making short-term trends often random.
Response: Accept uncertainty, combine various analysis tools (technical analysis + on-chain data + market sentiment), and set stop-loss orders.
2. High-frequency trading addiction.
Trap: Frequent trading to catch 'every fluctuation', leading to trading costs (fees, slippage) eating into profits.
Risk: Increased emotional trading, missing genuine trend opportunities.
Response: Set a daily trading limit, focus on high win-rate opportunities, and reduce noise interference.
3. Leverage abuse: The deadly temptation of betting small to gain big.
Trap: Using high leverage (e.g., 20x+) to pursue quick profits, ignoring liquidation risks.
Risk: Extreme fluctuations can amplify losses with leverage, potentially wiping out accounts.
Response: Keep leverage below 5x, reserve sufficient margin, or adjust fixed loss amounts based on leverage.
4. Anchoring effect: Being held hostage by the entry price in decision-making.
Trap: Overly focused on the purchase price, refusing to cut losses when in the red, and taking profits too early when in the green.
Risk: Falling into the 'break-even mentality' and missing the best opportunity for risk control.
Response: Make decisions based on current market dynamics rather than cost price, using trailing stop-loss/profit strategies.
5. FOMO (Fear of Missing Out) and FUD (Fear, Uncertainty, Doubt) cycle.
- Trap: Blindly chasing highs and cutting losses, swept up by community and media emotions.
Risk: Buying at the top or selling at the bottom, becoming a typical 'retail investor'.
Response: Stay away from social media noise, establish a cooling-off period rule (e.g., wait 15 minutes before acting).
6. Overfitting strategies: Backtesting perfectly ≠ effective in real combat.
Trap: Optimizing a 'perfect' strategy based on historical data while ignoring changes in market conditions.
Risk: Strategies failing in real trades, leading to consecutive losses.
Response: Regularly validate strategy adaptability, diversify multiple strategy combinations, and avoid single reliance.
7. Survivorship bias: Only seeing successful cases.
Trap: Imitating 'trading gurus' on social media while ignoring their potential risks or selective presentations.
Risk: Copying erroneous patterns and underestimating the true difficulty of trading.
Response: Learn from failure cases, keep a trading log, and establish a replicable system.