In the cryptocurrency market, why do retail investors tend to lose more the more they trade? Let's analyze this.
Firstly, retail investors typically have a win rate of no more than 40%. This means they make mistakes often and with considerable frequency.
Secondly, retail investors tend to hesitate to increase their positions when profiting, but do the opposite when facing losses, leading to even greater losses. When the market rises, they rush to take profits, resulting in small gains and larger losses. Over time, their earnings curve shows a downward trend with fluctuations.
Summarizing our own trading situations, we can conclude the following: Firstly, if we can sell a bit earlier when facing losses, and consider minor fluctuations as normal adjustments, we can continue to observe; secondly, sell a bit later when the market rises, but be sure to act during a pullback after a surge. Additionally, if the gain exceeds 10%, be bold in increasing your position, which can triple your profits, or even fill your position for substantial gains.
Retail investors often act against human nature, but the correct approach is counterintuitive. Don't panic when the market rises, continue to increase your position; and when the market falls, cut your losses promptly.
These are the methods to profit: one is through position sizing, and the other is through capitalizing on price increases. If you can achieve this, your profits will be significant. This point is crucial and should not be overlooked.