1. Phenomena and Reflection: Why Do You Always Lose Money in the Crypto Market

Over the years, I’ve seen too many people enter the market shouting "faith," only to leave with wounds and disappointment. My own story started this way—fresh out of college in 2014, with 30,000 yuan, I entered the crypto space. At that time, I had no idea what a candlestick chart looked like, and I followed online "experts" to chase rallies and sell on dips. When Bitcoin soared from 5,000 to 8,000 yuan, I had a floating profit of 5,000 yuan, feeling ecstatic and unable to sleep. But a week later, there was a 40% crash, and when I cut losses, my principal was down to 12,000 yuan.

Looking back now, most people who lost money fell into the same traps.

2. The First Trap: Stop-loss as a Virtually Useless Tool, Short-term Positions Turn into Long-term Traps

My mentor used to criticize very bluntly: "This isn’t trading crypto; it’s providing warmth to the market makers." I’ve remembered this for over ten years.

When Litecoin reached 180 yuan in 2017, I chased in, thinking I’d sell once it broke 200. But when it dropped to 160 yuan, I self-hypnotized, "This is just a correction," and kept holding. Eventually, it fell all the way to 80 yuan, and my initial 30,000 yuan was reduced to only 8,000 yuan.

Crypto market volatility is ten times that of traditional stocks, and holding on blindly is like gambling with your life. I learned this lesson with real money. Now, my approach is completely different—every trade must have a stop-loss. Even if I get stopped out 10 times, as long as I catch one trend, I can turn things around. Stop-loss isn’t about giving up; it’s about leaving yourself a chance to fight another day.

3. The Second Trap: Chaotic Capital Management, Going All-in on a Single Position Equals Gambling

Newcomers always think "doubling up in one shot," but 10 small profits can’t compare to one liquidation. I later divided my funds into six parts, with each position not exceeding one-sixth of my total capital.

When FTX collapsed last year, those who were fully invested lost everything. But because I kept my position in any single coin below 30%, I also suffered losses but was able to recover with other holdings. That’s the difference that good capital management makes.

The iron rule I summarized is this: always keep 30% of your funds as backup ammunition, maintain a 7:3 ratio between mainstream coins and altcoins, and after making profits, withdraw the principal first. The remaining profits are then used to snowball.

4. The Third Trap: Being Driven by Emotions, Losing Rationality in the Face of FOMO

The most terrifying thing in the crypto market isn’t the market itself, but human nature. Seeing others make money makes you eager; seeing prices fall makes you panic and sell. I’ve seen people wake up at 2 a.m. from messages in the group, sleepily launching into a full position.

Now, I have a set of fixed trading rules that I strictly follow. When to add positions, when to cut, when to exit—all written down. No matter how crazy the market gets, I don’t change the rules. I might miss a few big surges, but this way, I can avoid most big losses.

5. Summary

The biggest difference between the crypto market and other markets is its fast volatility, numerous participants, and complex information. Surviving in this environment depends not on prediction skills but on execution. Mastering stop-loss, capital management, and emotional control can at least reduce the probability of losses.

Over ten years ago, I used 30,000 yuan to learn these lessons, and now I share them in hopes that newcomers can avoid some pitfalls.