The Heartbreaking Truth for Individual Investors: Losses Are Not Due to the Market, but to Yourself

Crypto market brothers and sisters will eventually face a very “bitter” truth: most individual investors don’t lose because they guess the trend wrong, but because they can’t overcome their own emotions. When their account turns slightly red, they become anxious, their heart races, fearing profits will evaporate, so they hurriedly close their positions early. Conversely, when their account turns deep green, they lull themselves with the words “long-term,” holding onto their positions until heavy losses force them to cut. The familiar outcome: profits aren’t enough to cover fees, and losses are large enough to wipe out years of savings.

1. The Chronic Disease of Individual Investors: Trading Based on Emotions I’ve met too many people with the same scenario: Before opening a position, analysis is very logical, support and resistance levels are clear. But as soon as they enter the trade, all plans vanish. When in profit: Just a 5% gain makes them anxious, always fearing a reversal. They hurriedly close for “safety,” while on a genuine upward wave, a 20% increase in BTC is just the beginning. When in loss: At -8–10%, they console themselves with “long-term investment,” “it will come back.” But when losses reach 40–50%, their psychology collapses, selling at the bottom only to see a rebound shortly after. This is essentially a cycle of fear and greed: When in profit, they fear losing gains. When in loss, they fear that cutting will lead to more losses. Just market fluctuations, and reason immediately gives way to emotion.
2. The Counter-Natural Strategy: Keep Profits Long, Cut Losses Quickly My strategy is very simple, revolving around two ironclad principles:
3. Let Profits Run After buying, when the price increases about 15%, I set a trailing stop-loss. As long as the price doesn’t fall back below 10%, I hold the position. The higher the price goes, the more I raise the stop-loss to let the market reward me.
4. Cut Loss Immediately After buying, if the price drops more than 5%, I close the position without hesitation. Absolutely no averaging down to “recover,” because that’s the fastest way to turn a small loss into a disaster. Why 5% and 15%? A 5% stop-loss forces you to identify support levels beforehand. For example, set the stop-loss 1–2% below the nearest bottom, avoiding noise while protecting capital. A 15% profit target is suitable for coins with moderate volatility: enough to ride the trend fully, without greedily chasing the final segment, which is easy to choke on. Mathematically, it’s very fair: Even with a win rate of only 50%, but each winning trade gains +10%, and each losing trade loses -5%, after 100 trades, you still make a significant profit. The issue isn’t the formula but the discipline to follow it.
5. Why Most People Can’t Do It? There are three main reasons: Overconfidence: Always thinking you can catch the bottom and sell the top. The result is buying more right in the middle of a decline. Herd Mentality: Seeing the community hype buy, so jumping in, only to panic sell when the market crashes. When prices are truly low, they hesitate to invest. Short-Term Memory: In a bull market, they forget the painful crashes. In a bear market, they forget how crazy the market once was. A single green candle is enough to change all beliefs. The market is very fair but also very ruthless. Even great minds have suffered heavy losses from speculation. For individual investors, admitting that they can’t beat emotions but can succeed with rules is the most important step toward maturity.
6. How to Develop a “Counter-Emotion Resilience”? If you truly want to survive long-term, start with very practical steps: Create a Trading Plan: Clearly write down reasons for buying, stop-loss points, take-profit points. After placing an order, limit continuous monitoring of the price. Divide Positions into Smaller Parts: For example, split your capital into three parts: Part one: Take profit at 8–10% to preserve gains. Part two and three: Hold for larger trends. Regularly Review: Record each trade, calculate win rate, profit-loss ratio. Don’t blame “bad luck,” because data will give you the most honest answer. Conclusion The market always offers opportunities, but your capital doesn’t have a second life. Breaking the habit of “holding losses hoping for luck,” maintaining discipline with “planned take profits,” can sometimes be more important than predicting price increases or decreases. Learn to trade like a systematic trader, not like a gambler. That is the long-term path to survive and grow in crypto.