Discipline is the biggest risk control, while human nature is the biggest loophole.
Not long ago, a friend in the crypto community came to me when his account only had 1800U left. He told me this was his last chip, and if he lost again, he would completely leave the crypto world. I looked at his trading records and found the problem was very simple: he couldn't hold onto the positions he should have, and he stubbornly clung to the losses he should have cut.
I directly pointed out his problem: 'To turn things around in the crypto world, one must first discard the shortsightedness of 'taking profits when they are there' and the obsession of 'holding on until the end.' When the trend is favorable, dare to let profits run; when the trend is unfavorable, cut losses quickly. This is the bottom line for traders.' At that time, he was holding his phone, nodding in a way that seemed to understand.
I had him divide 1800U into 10 parts, with a single position not exceeding 10%. Once profits reached 20%, he would withdraw half of the profits to an independent wallet. At first, he was skeptical: 'With such a small position, when can I double it?' I replied, 'What the crypto world lacks is not doubling opportunities, but patience to avoid liquidation.'
The power of discipline: from 1800U to 14,400U in 22 days
In the following 22 days, he strictly adhered to the trading plan: carefully simulating the market before opening every day, setting clear stop-loss and take-profit points for each trade. He would hold onto his trend trades, and immediately exit any counter-trend trades that hit the stop-loss, never lingering.
The account funds steadily rose: 2300U, 3700U, 6900U… On day 22, his account reached 14,400U, exactly an 8-fold increase.
During that time, he would review the day's trades with me every day, discussing which operations were in line with the system and which were lucky profits. He later told me that these 22 days were the most peaceful period since he entered the crypto world, not because he made money, but because he found a sense of control.
The beginning of the collapse: when discipline gives way to greed
The change started on day 23.
I noticed he no longer synchronized his trading plan like before; sometimes when I asked, he would just respond perfunctorily. Later, he admitted that he had started to privately increase his position, reasoning that 'this wave of market will definitely push higher.'
I repeatedly reminded him: 'Don't forget the trading discipline from before; the market is always teaching a lesson to those who do not respect it.' He agreed verbally, but still acted on his own. On day 25, he actually went all-in on a shitcoin behind my back.
I asked him why he was taking such risks, and he replied: 'I used to be able to make 8 times by taking it slow, and now I feel I've mastered the market rules, this time I can leap to a new class in one go!' Overconfidence had already led him to lose rational judgment.
Panic and paralysis: from a 38% drawdown to complete zero
When his account retraced by 38% from the peak, he panicked and came to ask me what to do. He wanted to add to his position to average down, which is a typical retail trader's mindset.
"Immediate stop-loss, this is the last reminder!" I was exceptionally firm.
But he hesitated for a long time and ultimately did not act: 'Let's wait a bit, it will definitely go back up, wasn't it just like that before?' This kind of lucky thinking and loss aversion made him choose to stubbornly hold on, rather than decisively cut losses.
In the following two days, the market continued to plunge. On day 29, his account was completely wiped out.
It took only 4 days to go from 14,400U back to square one. The wealth accumulated over 22 days vanished into thin air in just 4 days.
The core of trading is not analysis, but mindset management
This friend's experience is by no means an isolated case. In my view, the vast majority of failures among crypto traders do not stem from insufficient technical analysis, but from falling victim to their own psychological traps.
Overconfidence is the first trap. After a series of gains, traders are prone to misjudge luck as skill and start increasing risk exposure. In fact, the market is highly random, and short-term success may just happen to align with the market rhythm.
Greed is the second trap. When the account shows considerable profits, people become dissatisfied with gradual growth and want more, faster. This greed leads them to abandon effective strategies in pursuit of unrealistic returns.
Loss aversion is the third trap. When a position incurs a loss, people would rather stubbornly hold on than stop-loss, because realizing a paper loss brings immense psychological pain. This 'holding on and not selling' mentality is the main reason countless traders get stuck deep.
How to survive longer in the crypto world?
Based on my years of trading experience, I want to share a few core suggestions:
1. Never trade with all your capital
Going all-in is a gambler's behavior, not trading. Reasonable position management is the foundation of survival; I recommend that the risk exposure of a single trade should not exceed 5% of total capital. This way, even if you stop-loss 5 times in a row, you still have the capital to continue trading.
2. Be more conservative after making profits
Strange but true: most massive losses occur after a series of gains. Success can make people relax their vigilance and become overly confident. After a significant increase in account funds, one should appropriately withdraw some profits and reduce position size, rather than increasing the bet.
3. Establish and adhere to your own trading system
A complete trading system should include: entry conditions, position size, stop-loss points, and take-profit points. More importantly, once established, it must be strictly followed, without letting emotions interfere with your decisions.
4. The market is never short of opportunities
The crypto world operates 24 hours a day, with opportunities constantly arising. But not every opportunity belongs to you; trying to grab every fluctuation will only lead to over-trading and exhaustion. Learning to give up some opportunities can actually improve your trading efficiency.
That friend finally asked me if he could make a comeback. I told him: 'The hardest part about the crypto world is not doubling your money, but remembering why you succeeded after you've doubled.'
The 1800U doubling relies on iron rules; being wiped out comes solely from greed and luck. Discipline itself is a trader's greatest capital; lose it, and no matter how high the profit, it will ultimately be an illusion.
Have you ever experienced similar trading psychological traps? Feel free to share your experiences—on this road in the crypto world, we all need to constantly reflect and grow. Follow Xiang Ge to learn more first-hand information and precise points in the crypto world; learning is your greatest wealth!#巨鲸动向 #加密市场观察 $ETH
