Many people ask me, why is it that some people steadily increase their assets through crypto investments, while others keep losing money and sinking deeper? My observation is: the real gap isn’t in choosing the right coins, but in the psychological resilience when facing downturns.

What impressed me most was a message from a trader. He said one of his positions went from five figures directly down to almost zero, and he was trembling while watching the market. I didn’t ask what coin he bought, nor his entry logic; instead, I asked a sharp question: "Are you waiting for a rebound after a 5% drop?"

His answer was three consecutive "yes" responses.

In my five years of market observation, I’ve seen such situations over a hundred times. The problem isn’t how brutal the market is, but that too many people treat "luck" as the last lifeline in trading — but unfortunately, that lifeline never saves anyone.

**90% of retail investors make the same mistake**

I’ve analyzed countless traders’ records and found that everyone’s thinking process about stop-losses is astonishingly consistent:

When the decline is 2%-3%, it’s no big deal. They think it’s normal fluctuation, telling themselves "it will bounce back soon," and their monitoring frequency doesn’t even change.

When it drops to 5%-10%, they start to regret. Anxiety rises, but they quickly comfort themselves with "I’ve lost so much already, selling now isn’t worth it," falling into a classic vicious cycle: the more they lose, the harder it is to sell; the more they hesitate, the bigger the loss becomes.

When the decline exceeds 20%, they go completely passive. Some uninstall their trading apps altogether, and the final outcome is usually twofold — either they get stuck holding, or they cut at the lowest point in despair.

How deadly is this based on data? A 50% loss requires doubling the investment to break even; deeper losses require several times the gains to recover. The market never turns around just because someone is "reluctant to sell," but instead, it drags hesitant traders even deeper.

**What is the correct approach?**

Rather than waiting for a miracle, it’s better to establish a clear stop-loss system. Here’s a relatively feasible approach:

First, set psychological expectations. Before buying any coin, determine the maximum loss you can accept. This number varies from person to person, but never exceed 10% of your total funds. Once set, you must have the resolve to execute it.

Second, adopt flexible partial stop-losses. You don’t have to sell everything at once. You can sell part of your position when the decline reaches 5%-10%, locking in some risk while leaving room for a comeback.

Finally, keep records and review. After each stop-loss, ask yourself why you lost. Was it a wrong market judgment, or poor timing? Only through repeated review can you break the cycle of making the same mistakes.

Ultimately, protecting your principal is always more important than anything else. Those who survive in the market aren’t necessarily those who make every trade profitable, but those who know when to admit defeat. Luck-driven psychology is the most expensive cost in trading — I’ve seen too many people pay a heavy price for it.