Playing with cryptocurrencies is the same, so why do some people profit while others get liquidated? Check if you have encountered any of the following situations!

In the crypto space, many individuals continue to trade even after being liquidated, mainly for the following reasons:

Influence of speculative psychology

- Desire for quick profits: The high returns from contract trading are very attractive, and many see it as a shortcut to rapidly growing wealth. Compared to other investment avenues, they firmly believe that contracts can generate huge profits in a short time. This strong desire for quick gains makes it difficult for them to give up even after experiencing liquidation. Just like some people witness others becoming rich overnight through contract trading in the crypto space, they fantasize about becoming lucky themselves, continuously investing even after liquidation.

- Unwillingness to admit defeat: After liquidation, most people find it hard to accept failure, believing it was merely due to bad luck or operational mistakes, and are convinced that they can win back their losses next time. This unwillingness to admit defeat drives them to continue participating in trading, trying to recover their losses. For example, someone might experience liquidation due to a misjudgment in contract trading but believes that their analysis of the market is mostly correct, attributing the failure to unexpected factors, and thus decides to try again.

Cognitive bias issues

- Overconfidence: Some investors are overly confident in their trading abilities, thinking that they can master contract trading skills through learning and training, thus ignoring potential risks. They believe that they can accurately judge market trends in a complex environment to achieve profits. For instance, some novice investors, after learning some basic trading knowledge, feel they can operate contracts without fully recognizing the uncertainties and risks of the market.

- Misunderstanding of risk: Some individuals have insufficient understanding of the risks associated with contract trading and fail to truly comprehend the severe consequences of liquidation. They may view liquidation as a temporary setback without realizing it could lead to significant financial losses or even bankruptcy. For example, some traders focus solely on potential gains while ignoring risk warnings, believing they can control the risks, only to regret it after experiencing liquidation.