Many traders have experienced this dilemma—hard-earned profits wiped out in a single leveraged move. Today, I want to discuss the logic behind this.

**Where is the true root of losses**

First, look at the data: when a certain asset's search popularity peaks, the following 7-30 days often see returns turn negative. What’s behind this? It’s the precise exploitation of retail traders’ FOMO emotions. Someone in the group calls a trade, and others rush in, only to catch the last wave. I know someone who lost 80% of their capital in a week; that feeling is a profound lesson for any trader.

And high leverage amplifies all this. A 10x leverage means a 10% drop directly results in liquidation. The crash in October 2025 was even more brutal—1.64 million people lost their entire holdings due to excessive long leverage. I’ve seen people who used 100x leverage for just 3 minutes of excitement, only to be liquidated immediately. Leverage is a double-edged sword; used correctly, it’s a tool, but misused, it’s a meat grinder.

There’s also a common self-deception: stubbornly holding onto losing positions. The mentality of "temporary correction" can turn into "liquidation warning," and finally, being sold out at the bottom price. Data shows that assets with losses exceeding 50% typically take an average of 120 days to recover, but most people simply can’t hold on that long. This is a classic case of loss aversion bias at work.

**Rules are more valuable than luck**

Relying on a "gut feeling" is superstition; it’s better to establish a systematic trading discipline. Market fluctuations are objective, but what can be controlled is your risk management—stop-loss levels, position size, leverage multiples—all should have clear rules, rather than being driven by impulsive decisions.