I didn't believe it before, until I saw that scene on May 11, 2022, and I still feel lingering fear to this day.......
On the night LUNA collapsed, someone lost 1,200,000 U in three days, leaving only enough for a breakfast.
It's true, no exaggeration.
At that time, the market value of LUNA was still thriving. You had 10,000 LUNA in your account, which was worth 1,000,000 U the night before. Before going to sleep, you were still a bit calm:
“UST has only de-pegged by 10%, Do Kwon will definitely save it, at worst just endure it.”
As a result, when I woke up, only 700,000 was left. You feel a bit panicked, but you still think to yourself: “A 30% drop is normal fluctuation.”
Put down the phone and continue sleeping. When you wake up again, only 10,000 U is left.
It's not that you didn't set a stop-loss; it's that you never thought... it could go to zero directly.
You don't believe in misfortune, smashing your piggy bank to invest 200,000 U to buy the dip, and then buying 200,000 LUNA, fantasizing that as long as it rebounds to 10 U, you will directly double your investment and revive!
You start to fear sleeping, staying up all night watching the prices drop from 1 USD to 0.1, then to 0.01, then to 0.000001...
Until the exchange directly delists it.
In three days, 1.2 million U, now just a joke.
The person hasn't died, but their heart truly has broken.
Don't think this kind of thing is far from you.
In the crypto world, stories of liquidation play out every day.
What kind of market is this?
7×24 hours around the clock, no rest, no waiting.
No price limits, it can soar in the sky or crawl on the ground at any time.
Leverage is rampant, often 10x, 20x.
The emotional intensity is off the charts; as soon as someone shouts 'bad news', the entire market shakes.
Shanzhai projects tell a good story, and even shells can triple.
The liquidation mechanism is public and transparent, and whales smashing the market directly cut your bottom line.
Don’t say you’re stable just because you only use 5x leverage.
You've never experienced a day in crypto where prices drop 20%, dozens of times a year, each time feeling like being skinned alive.
ETH dropped from 4000 USD to 800 USD last time.
It's not that the project is bad; the liquidation price on-chain is marked clearly.
The market maker knows where the liquidation points are, where 'cheap corpses' can be picked up.
So, stop fantasizing that 'prices won’t drop anymore'!
Also, don’t believe in 'faith', 'value', or 'consensus' anymore.
The real experts who can survive in the cryptocurrency world are never:
Those who stare at candlesticks every day guessing rises and falls.
But rather those who can withstand, endure, and know when to stop.
If you want to survive in the crypto world, don’t just listen to the hype, and don’t let the myth of getting rich quick cloud your judgment.
Real opportunities always belong to those who are sober, calm, and strategic.
Have you ever had such an experience?
♦ Bitcoin keeps rising; you can’t help but rush in, only to buy at the short-term peak.
♦ Seeing the market crash, you panic sell, only to hit the lowest point, and the next day it rebounds.
♦ You don't not know how to read charts, nor have you not researched projects; you just can't control your hands.
Don’t worry, today I will help you thoroughly understand the essence, dangers of chasing gains and cutting losses, and how to avoid it, improving your survival and profitability in the crypto world!
1. What is 'chasing gains and cutting losses'?
Let's first define 'chasing gains and cutting losses.'
♦ Chasing gains: Prices have already risen significantly; you are afraid of missing out, FOMO kicks in, and you rush in to buy.
♦ Cutting losses: Prices drop rapidly, you feel panic, fearing greater losses, and hurriedly sell off.
On the surface, this seems like 'following the trend', but in reality, many times you are making 'late decisions' driven by emotions.
The volatility in the crypto market is huge; a 20% increase one day and a 30% drop the next is common. If you chase at the top and sell at the bottom, this buying high and selling low pattern will almost certainly lead to losses over time.
2. Why do people chase gains and cut losses?
This is a psychological issue, not an IQ issue.
1. FOMO psychology (Fear of Missing Out)
♦ Watching others make money, you fear missing out, and even if the price has already doubled, you rush in.
♦ Many people are not looking to make money; they are afraid of 'not making money.'
2. Panic psychology (Panic Selling)
♦ When prices suddenly drop 10%, 20%, your mind goes blank, only thinking 'I must escape.'
3. Short-sighted psychology.
♦ Focus only on the current candlestick, ignoring the long-term trend, leading to frequent trading at the wrong times.
4. The influence of social media.
♦ The group says 'the bull market is here,' and the blogger shouts 'from 1000 U to 100,000 U', and you believed it.
♦ Information asymmetry keeps you always behind the main players.
In summary: Chasing gains and cutting losses is the result of emotional trading, not rational analysis.
3. The real consequences of chasing gains and cutting losses.
Let’s look at a few real cases:
Case 1: End of the 2021 bull market.
♦ Bitcoin breaks through 60,000 USD, and Weibo and Twitter are full of 'towards 100,000'.
♦ Newbies buying high only to see the market crash over 50%, getting trapped.
Case 2: The pump before LUNA's crash.
♦ LUNA rose from 70 to 120, many who chased gains thought 'this coin has strong institutional backing.'
♦ Days later, prices crash to zero; those who sold off didn't even catch the rebound.
Case 3: Selling at the floor.
♦ During the bear market of 2022, many saw BTC drop below 20,000 USD and panicked to sell.
♦ For example: After one year, Bitcoin doubles, but they have already gone to cash.
It's not a matter of luck; it's that the trading system has issues.
Chasing gains and cutting losses makes you lose two of the most valuable things in the crypto world:
♦ Principal: One sell-off could result in a loss of 30-50%, making it very difficult to break even.
♦ Confidence: You will increasingly doubt yourself, ultimately exiting the market.
4. How do the main players exploit your chasing gains and cutting losses?
Did you know? Every time you chase gains and cut losses, you are helping the main players to take over or lift the load.
1. Pump and dump:
♦ The main players accumulate at the bottom and then use news and candlesticks to lure retail investors to chase gains.
♦ After prices stagnate at high levels, the main players sell off, while retail investors buy at the peak.
2. Smash the market to accumulate shares:
♦ The main players use large orders to create panic, causing retail investors to sell off.
♦ The main players buy in at low points, waiting for the next wave of rebound.
This is the so-called 'cutting leeks' tactic, and you and I are the victims of emotional trading.
Only if you don’t chase and don’t cut losses can the main players do nothing about you.
5. How to avoid chasing gains and cutting losses?
It’s easy to talk about principles, but difficult to implement. So how to operationalize it?
Method 1: Develop a trading plan.
♦ Write down before every trade:
♦ Why did you buy?
♦ What’s the expected rise?
♦ How much will you stop-loss?
♦ Strictly adhere to your plan, avoiding last-minute changes.
Method 2: Set stop-loss and take-profit.
♦ Don’t let emotions dictate your buy and sell points.
♦ Set a 3:1 risk-reward ratio, e.g., limit losses to 5% and expect at least 15% profit.
Method 3: Use technical analysis to determine entry and exit points.
♦ Look at trend lines, support/resistance levels, and trading volume, rather than relying on 'feelings.'
♦ For example: Confirm support after a breakout; consider buying; if it breaks key support, then consider stopping loss.
Method 4: Dollar-cost averaging + long-term holding.
♦ If you can't time the market accurately, it's better to invest a fixed amount regularly in mainstream coins.
♦ For instance, invest in BTC and ETH every week, extend your time frame, regardless of short-term rises or falls.
Method 5: Stay away from social media distractions.
♦ Don't let internet celebrities' recommendations or short video titles dictate your trades.
♦ What you see is the 'result'; they profit from 'traffic.'
6. How to survive?
'Investing spare cash'—those who gamble with their meal money end up delivering takeout.
'Don't touch contracts'—10x leverage increases 10% and you double, decreases 10% and you go to zero; math won't lie to you.
'Don’t panic when prices drop'—when has Bitcoin not come back during a bear market? Those who held onto their assets ultimately won.
'Don't get carried away when prices rise'—when others showcase their profits, it might be about to crash; don’t be the one left holding the bag.
Ultimate advice:
- There is no 'wealth code' in the crypto world, only 'cognitive monetization.'
- You can't earn money outside of your understanding; what you earn by luck will ultimately be lost through skill.
- The real winners accumulate coins in bear markets and sell in bull markets, rather than chasing gains and cutting losses every day.
The crypto world is exciting, but it’s not a casino. 'Don’t let emotions run wild; use your brain to make money, not your heartbeat.'
Remember: The expert isn’t the one who makes the most, but the one who loses the least.
I am A Xin; if you don’t know what to do in a bull market, click on my avatar, follow me, for bull market strategies, contract codes, and free sharing.
