Discipline is the last line of defense for traders; once breached by greed, wealth flows away like fine sand in an hourglass, disappearing in an instant.
When he found me, the principal of 3800U had already shrunk to half. His tone was almost pleading: 'Brother, please take me along, I’ll give you half of the profits.' I could clearly feel the urgency of wanting to recover losses, and eventually agreed to help, but made it clear that I was not looking for a share, only emphasizing the importance of strict discipline.
We agreed: the funds would be divided into eight parts, with a single ticket position not exceeding 12%, and the profit portion would be transferred to an independent account for locking in promptly, with stop losses to be executed decisively. In the first 22 days, we strictly conducted pre-market simulations, closely monitored during trading, and made corrections in reviews; the account surged from 3800U to 76,000U, a 20-fold increase.
However, as a seasoned trader once said, "Continuous victories can also affect trading psychology." Profits made him increasingly exuberant, and he began to mutter, "Just one more push and I’ll be completely turned around." I repeatedly reminded him that "holding onto profits is ten times harder than doubling them," but everything started to change quietly.
01 The critical point of losing control, how profits lead to overconfidence
On day 25, he went all-in on a popular altcoin without communicating with me, not even setting a stop-loss. When I discovered it, the account had already retraced by 51%. I ordered him to stop-loss immediately, but he was already resistant to advice, insisting on waiting for a rebound and stating, 'Such a great opportunity cannot be missed.'
Just three days later, that altcoin experienced a cliff-like crash, with 76,000 USDT in profits almost evaporating, leaving only 8,000 USDT. Even more lamentable is that he did not reflect on his own issues, but rather blamed me: 'Why didn’t you stop me!'
The change in this trader's mindset perfectly illustrates the overconfidence bias in trading psychology—after a series of profits, the trader overestimates their abilities and judgment, beginning to take blind risks.
He fell into the typical 'illusion of control', believing he could predict market trends while ignoring the inherent risks of the market. Overconfidence is a deadly gift from the market; it always sows the seeds of failure when we are most pleased with ourselves.
02 The underlying mechanism of profit withdrawal, why can't profits be held?
"Let profits run" is a classic saying in the trading world, but how to let them run without disappearing is the true test of a trader's level. Many traders fail to hold onto profits due to two psychological traps: greed and loss aversion.
Greed makes people want more after profits, unwilling to take timely profits; while loss aversion makes traders feel the pain of losses far more than the pleasure of profits. These two psychological factors together lead traders to either take profits too early or cut losses too late.
In this case I experienced, another key issue was exposed: the lack of strict adherence to stop-loss discipline. When profits reach a certain level, the reasonable approach is to set a dynamic take-profit point, or at least secure some profits.
The most dangerous moments in trading are often not during losses, but during substantial profits. Because success can lead to complacency, making one believe they have mastered the market rules.
03 How to avoid history repeating? Build a system to defend against greed
To avoid similar tragedies from happening again, I need to share three practical methods, all of which are experiences I have exchanged for real money.
First, establish a profit distribution mechanism. When a single trade achieves a certain profit margin (such as 50%), it should be mandatory to withdraw 30%-50% of the profits into a cold wallet or bank account. This not only locks in profits but also psychologically confirms that 'this wave has been successful.'
Second, implement a staggered reduction strategy. When the position's profit reaches the preset target, first close part of it (such as 1/3 to 1/2), ensuring that the cost has been recouped, allowing the remaining position to run at 'zero cost'. This way, even if the market reverses, it will not hurt the principal.
Third, enforce regular breaks. The cryptocurrency market runs 24/7, which can easily lead to decision fatigue and psychological burnout. After completing a significant wave of profits, one should force themselves to leave the market for 2-3 days to reset their emotions and avoid entering the next trade in an 'exuberant' state.
My personal hard rule is: Whenever a single trade profits over 100%, immediately withdraw the principal and 50% of the profits, and rest for at least 48 hours before re-analyzing the market. This simple rule has saved me multiple times from potential greed traps.
04 Practical tools and techniques for building trading psychology
In addition to the aforementioned methods, modern traders can also use various tools for psychological construction:
Fear and greed index: Objectively understand the overall emotional state of the market, avoiding being swept away by collective psychology.
Trading log: Not only record profits and losses, but also record the emotional state during each trade, identifying the triggers for emotional fluctuations.
Mindfulness practice: Engage in simple deep breathing during emotional fluctuations and ask yourself key questions, such as 'Is this an opportunity or an impulse?'
For traders who wish to survive in the market for the long term, I strongly recommend developing the habit of regular review. It is not just about reviewing failed trades, but also about reviewing successful trades—because often the hidden dangers lie within success.
To this day, I still keep the chat records from that time. They remind me: In the cryptocurrency market, doubling in the short term is not the hardest part; the hardest part is remaining sober after profits without inflating. True investment success is not about the explosive rise of account numbers, but the ability to maintain one's heart and discipline.
The 8,000 USDT left by that trader could have been the capital for a new round, but he chose to abandon this market. Perhaps he still does not understand that in this market, surviving is far more important than making a single profit.
Goodwill needs to be paired with rigid rules, while human weaknesses need to be avoided through systems. This is the ultimate lesson for every trader. Follow Xiang Ge to learn more firsthand information and precise points in the cryptocurrency circle, becoming your guide in the crypto space; learning is your greatest wealth!#巨鲸动向 #加密市场观察 $ETH
