$BTC 1. Main Reasons for Retail Investors' Losses (Part 1)

1. Forced Liquidation Due to High Leverage

Cryptocurrency contract trading allows investors to amplify returns through leverage, but leverage is also a double-edged sword. Many retail investors hold a mindset of 'getting rich overnight' and choose excessively high leverage multiples, triggering forced liquidation with even slight market fluctuations. For example, using 50x leverage means that a mere 2% market movement can lead to liquidation. This high-risk operation makes it easy for retail investors to lose all their principal in a short time.

2. Lack of Risk Management and Stop-Loss Awareness

Many retail investors enter the market without a clear risk management strategy and often cling to a sense of luck after incurring losses, believing the market will rebound, thereby ignoring the importance of stop-losses. However, the high volatility of the cryptocurrency market means prices can deviate from expectations in an instant. Without timely stop-losses, small losses can turn into large ones, even leading to a total loss of funds.

3. Irrational Trading Driven by FOMO and Panic Selling

The cryptocurrency market is often filled with emotional fluctuations, and retail investors are easily swayed by panic and FOMO (Fear of Missing Out) to follow trends blindly. They buy high during market surges and panic sell during corrections, resulting in a vicious cycle of buying high and selling low, leading to losses.

4. Lack of Market Understanding and Trading Skills

Contract trading requires not only a keen judgment of market trends but also trading skills and strategies, such as how to analyze technical indicators and set entry and exit points. Retail investors often lack systematic learning, relying on hearsay or copying others' trades, ultimately resulting in losses due to misjudgments.

5. Overtrading and Greed

Some retail investors easily fall into 'addiction' in trading, frequently opening and closing positions without considering the quality of trades. Especially after consecutive losses, the desire to 'recoup losses' leads to emotional trading, further exacerbating losses. In addition, greed causes some investors not to take profits promptly during profitable trades, allowing profits to evaporate or even turn into losses.