Frequent losses in the trading process and falling into the vicious cycle of 'chasing highs and cutting losses' can be deconstructed from behavioral finance, psychology, and two dimensions.
I. The amplification mechanism of human weaknesses
(1) Loss aversion trap
Experimental data shows that the pain of losses is 2.5 times greater than the pleasure of equivalent gains. When the coin price drops by 5%, investors instinctively expect a rebound and are reluctant to cut losses; when it rises, they sell too early out of fear of profit withdrawal. This asymmetric psychology leads to mismatched holding periods.
(2) Dopamine manipulation
The cryptocurrency market experiences severe fluctuations every 24 hours; each price movement stimulates dopamine secretion. Research from the University of Chicago found that the prefrontal cortex activity of frequent traders is 27% lower than that of long-term investors, and decision-making is gradually dominated by primal brain regions.
(3) Social recognition craving
When 'Bitcoin breaks 60,000' trends on social media, the almond nucleus triggers FOMO (fear of missing out). MIT experiments show that for every 10% increase in community discussion heat, the probability of retail investors chasing prices increases by 43%, even when the RSI indicator is already overbought.
II. Systemic traps in market structure
(1) Whale manipulation model
The top 2% of addresses control 85% of BTC circulation. The manipulators create 'false breakouts' to harvest retail investors: they first trigger follow-on buying with small funds, and then establish short positions in the derivatives market before dumping. Data from 2023 shows that over 68% of price spikes and drops show signs of manipulation.
(2) Leverage death spiral
When the market uses 20x leverage, a 5% fluctuation can trigger liquidation. Data from Bybit shows that 83% of liquidations occur during the most volatile hours from 1-4 AM (the sleeping hours of Asian investors), with quantitative trading robots accounting for 61% of trading volume during this period.
(3) Information fog war
Project parties manipulate expectations by creating vague benefits such as 'mainnet launch' and 'strategic cooperation'. Stanford University analysis found that the frequency of emotional words like 'revolutionary' and 'ecosystem' in altcoin white papers is negatively correlated with project lifespan (r=-0.72)
This method is one I have personally tested: from February to March 2025, in one month, I turned 5000 into 100,000! The profit reached 2108.17%!
Six trading rules to boost win rates
Having learned my simplest trading method, I have since experienced a smooth journey in the crypto space, as I firmly grasp the following six rules.
1. For strong coins, if they fall for nine consecutive days from a high position, be sure to follow up in a timely manner.
2. Any cryptocurrency that has risen for two consecutive days must have a timely reduction in position.
3. Any cryptocurrency that rises more than 7% has a chance to continue climbing the next day; one can continue to observe.
4. For strong bull coins, be sure to wait until the correction is over before entering.
5. If any cryptocurrency has three consecutive days of flat volatility, observe for another three days; if there is no change, consider switching.
6. If any cryptocurrency fails to recover the previous day's cost the next day, exit promptly.
1. Do not borrow money to trade; protect your wallet.
Trading in the market is like playing with your heartbeat; it's risky. Borrowing money to trade? That's a no-go! What if you lose? How will you live? Use your spare money; if you play, you can afford to lose.
2. Play with spare money, maintain a stable mindset
Use money that you won't need urgently to trade; this way, even if you lose some, it won't affect your daily life, and a calm mindset allows for wise decisions.
3. Long-term is gold + patience is king
Experts do not like to trade frequently; they understand 'casting a long line to catch big fish' and believe time can sift out truly valuable coins.
4. If there is no opportunity, take a break and wait for the right moment.
No suitable investment opportunities? Then wait patiently; opportunities favor those who are prepared. Don't rush; the best is yet to come.
This article only represents the author's views and does not constitute any investment advice; investment should be cautious.
In conclusion: surviving is the hard truth. The crypto market has no eternal winners but has lasting survivors. They do not rely on getting rich once but on avoiding fatal losses.
Mistakes can be key opportunities; gradually achieve compound interest. To survive in the crypto space, respecting rules, managing emotions, and maintaining a bottom line are essential courses. You ask me the secret to success? I
I just want to say: only those who can stay at the table have the right to talk about victory.
Technology is the foundation of survival; teaching someone to fish is better than giving them fish. The real charm of investing is to gain big from small investments, and holding onto assured profits is fundamental to financial management! Remember to bookmark and follow for continuous sharing of crypto insights and to explore the wonders of the crypto space together!
