Four Psychological Traps That Cause Traders to Burn Out – How Many Have You Fallen Into?

Brothers, today no K-line discussion, no narrative hype. Let’s get straight to the reason why so many people keep repeating the cycle of “getting in a little and then getting wiped out.” Looking back at a series of account blow-ups—from amateur traders to professional financiers—the common factor isn’t the market, but psychology. Here are four traps that 90% of people believe they can avoid before getting burned. Trap 1: Leverage as a Mirror Reflecting Greed and Fear Many boast “daring to trade 100x,” but forget to consider actual leverage: Actual leverage = Leverage × Position size ratio 100x but using 10% of capital = actual risk is 10x. That means you’re betting that the market won’t move against you by 1% in a few seconds. That’s not trading, that’s gambling. Many account blow-ups come from “full margin 100x” positions. Just a 0.8–1% price move can wipe out the account. When losing, people often blame “bad luck.” But fundamentally, it’s gambler’s psychology: always believing “this time is different.” Principle for survival: Keep actual leverage ≤ 5x. Exceeding this, you’re risking the existence of your account for a thrill. Trap 2: Not Cutting Losses – Self-Removing Your Life Vest “Hang in a little longer, what if it bounces back?” – sound familiar? Markets can drop sharply in a very short time. Most accounts get wiped out because they don’t have stop-losses. Cutting losses goes against instinct, but it’s what protects you. Discipline 2%: Only allow a maximum loss of 2% of your account per trade. Losing 2% means stop, no re-entry. Have $50,000? Only risk $1,000 per trade. Preserve $49,000, and you still have a chance. If wiped out, the game is over. Trap 3: Overleveraging Gains – Confusing “Rolling Snow” with “All-in” Many want to go “all-in” on the next trade after a small profit. This isn’t capital rolling, it’s gambling. Proper capital rolling: 10% profit → add 10% of the profit to the next position, not all in. Take some profit out if possible. For example: $10,000 capital, grow to $15,000. Correct way: use 20% of the profit ($1,000) for the new trade, keep $4,000 aside. If the new trade hits stop-loss, you still have a $3,000 profit. Conversely, going “all-in” means one trend reversal can wipe out both capital and profit. Trap 4: Not Taking Profits – Losing Due to Greed “Already made 50%, should I wait for 100%?” This question causes many to turn profits into losses. Tiered profit-taking strategy: 20% profit → take 1/3 50% profit → take another 1/3 If the trend short-term breaks → exit completely This method helps lock in most profits, even if the market suddenly reverses. Those aiming to “sell at the top” are often the ones… selling in panic. The Survival Rules for Traders Assess risk before entering a trade Forget about 50x or 100x, focus on actual leverage. Discipline 2% Max loss per trade: 2% of your account. Always set stop-loss and take-profit Let the machine do the work, don’t let emotions decide. Fewer trades, higher quality Overtrading only enriches the platform. Wait for the right setup. Conclusion The market isn’t kind, but it’s very fair. It doesn’t reward the reckless, but rewards the survivors. To go long-term, you need a system, discipline, and patience. Even geniuses lose due to psychology. Ordinary people can only win with rules. Remember: Opportunities are always there, as long as your account remains.