Retail investors trapped in the "loss cycle"

I came across a recent live trading record by the internet celebrity @大z子@, and it really hit me hard. Even through the text, you can feel that kind of despair that cuts to the heart.
What @大z子@ went through is also a lesson every investor has to face. He is a snapshot of countless retail traders—today, I’ll use @大曾子@ as a case study to break it down! I’m going to pour some “spiritual chicken soup” for everyone!
Feeling reflective on the Qingming holiday, I understand reverence even more. In the current market, the most important thing is only two words: control.

[Taoguba]
From my perspective, let me talk with everyone about what the true meaning of the two words “control” is under different market conditions.

Many retail traders, when faced with a prolonged weak, downward-moving market, aren’t actually afraid! It’s not that they have a good mindset; it’s that they fear fear itself, which is a kind of ability that requires cognitive support. If you can’t understand risk and can’t see the trend clearly, you naturally won’t truly be afraid—you’ll just become numb, be overly optimistic, and harden yourself to endure. Day after day, they fantasize that they are the chosen one, trapped in survivorship bias. They’re clearly gamblers who got lucky, yet they self-label as a long-term value investor, until they finally get their heavy position deeply underwater and only then realize: they were never an exception—they were just among the group that got harvested the most brutally.

@大z子@! From scaling into positions to going all-in—greed and unwillingness to lose pushed completely out of control
The @大曾子@ on the platform is the most real live textbook for “retail traders trapped in getting back to breakeven.” Every step of his trading is a perfect example of greed and unwillingness to lose fully slipping out of control.

During the Qingming holiday, I took a quick look! At first, he still understood risk: splitting into 2–3 stocks, not daring to put it all on one.
Back then, he still knew how to spread risk, and he still knew you can’t put all your eggs in one basket. But when the market was weak, he couldn’t manage his hands. He was fully invested every day, chasing rallies and selling off every day. Bought at the spike, got trapped as it pulled back; chased in the morning, dumped at the close; cut today, chased tomorrow. Every trade was being hijacked by “unwillingness to leave until it breaks even,” driven by “greed to make a little and stop.”

His account shrank day by day. Losses kept increasing. Unwillingness to lose got stronger, greed got more urgent. The more he wanted to get back to breakeven, the more distorted his actions became; the more he chased rallies and chopped on weakness, the more brutally he lost. Rationality was completely swallowed by emotions, and he no longer cared about the principle of spreading risk.

By Friday, he completely broke down: from scaling in → directly going all-in on a single position by going all-in on one.
This isn’t “upgrading the model”; it’s humanity collapsing completely under heavy pressure.
Unwillingness reached the extreme—he only wanted to get back to breakeven with one shot, wiping out the previous losses.
Greed reached the extreme—he felt scaling in was too slow; he might as well gamble on something bigger, hoping to turn things around overnight.
Anxiety, fear, and impulsiveness completely overpowered all awareness of risk.
He clearly knew going all-in was a dead end, yet still couldn’t control himself from making an all-or-nothing bet.

@大z子@ uses the most real account to tell you:
For retail traders to lose big money, it’s never about losing in terms of skill—it’s about losing in terms of control: in a continuously weak market, the more you lose, the more frantic you get; the more frantic you get, the more you gamble; the more you gamble, the more you lose.
His “today” might be the “tomorrow” of countless retail traders: at the beginning they’re cautious, then after losing too much they’re hijacked by unwillingness and driven by greed; in the end, in order to get back to breakeven, they go all out, not caring about anything, and wipe out all their principal.

This is also the vicious loss cycle that most retail traders can’t escape

“Going against the trend” is the root cause of the losses! You can see the garbage in the market clearly, but you can’t restrain the impulse to trade—you always think “get back to breakeven and I’ll stop,” then blindly chase rallies and sell into weakness. When you run into a big drop, your account loss expands; unwillingness deepens; you refuse to cut losses; instead you blindly add positions. After your mindset collapses, you abandon every risk principle and go all-in, dreaming of a comeback with one shot. After the all-in fails and losses worsen further, you either cut out at the lowest point or stubbornly hold to the end. Then you still can’t accept it, and you re-enter again with a lucky-guess mentality—repeating the same mistakes.

When the market is good, greed makes you want to earn more; when the market is bad, unwillingness makes you want to get back to breakeven. Always chasing, always in a hurry, always wrong.
The people who truly lose big money aren’t losing because of just one wave of a brutal plunge; they lose because: when it drops they won’t leave, when it rebounds they can’t bear to sell, breakeven stays far away, and in the end they drain their principal by repeatedly bottom-fishing and repeatedly getting trapped.

Almost every retail trader is trapped by the same thought: sell when you’re back to breakeven, stop when you’re back to breakeven, and when you make money this time, I won’t play anymore.

They know the market is bad, and the outside situation is unstable; they know capital keeps exiting. Against the backdrop of a big trend down, capital fundamentally isn’t willing to take the baton. They know in a market like this, when you act, 8–9 times out of 10 it’s a loss—yet still they can’t control their hands. They go heavy and hammer every day! They always think: if I just endure a bit more, I’ll get back to breakeven. They always think: if I add one more time, I can dilute the cost. They always think: this time it’s my turn to profit.

So what happens? Once they buy it drops; once it drops they get trapped; the more they get trapped, the less willing they are to accept it. The more they want to get back to breakeven, the more frequently they trade; the more frequently they trade, the more they lose. In the end, they fall into a dead loop: loss → wanting to get back to breakeven → random buys → lose even more → wanting to get back to breakeven even more. The person is still in the market, but the heart is already deadlocked by those two words: “back to breakeven.”

Because what traps you is never the stock—it’s human nature, carved into your bones
Retail traders’ losses are never because of bad luck or poor skills. It’s because those two feelings—greed and unwillingness to lose—drag you completely into the abyss.

1. Unwillingness to lose: the obsession with getting back to breakeven is the most lethal poison
   Behavioral economics has long proven that the pain caused by losses is more than twice as much as the happiness from profits. What retail traders fear most isn’t having no opportunity to make money; it’s “real, concrete losses.” They feel like “if I don’t sell, it doesn’t count as a loss,” and “cutting losses means I truly lost.” To avoid this pain, they’d rather stubbornly hold through deep traps than cut losses in time.

The longer the stocks in their hands stay trapped and the more they lose, the harder it becomes to let go. The thoughts in their heads are never “whether this stock still has an upside logic.” Instead, it’s “I’ve already lost so much; if I leave, it will be a waste.” This is the sunk cost fallacy—treating the time, money, and effort invested in the past as reasons not to exit. The more they get tangled, the more they lose, until unwillingness fully hijacks them.

2. Greed: when the market is good you want to make more; when the market is bad you want to get back to breakeven
   Greed is another fatal weakness for retail traders. When the market is hot, greed makes you chase high, go all-in, and refuse to let go. You always feel it can go up even more—when you make money you still want more, and you give back all profits. When the market is sluggish, greed turns into an obsession of “leave when I’m back to breakeven.” Even though they know acting in a weak market is basically handing out money, they still cling to wishful thinking: “It’s dropped so much, it should rebound,” “This time I can hit the opportunity,” dreaming of earning back all the losses in one shot.

For retail traders, waiting in cash is extreme torment. If you don’t trade, you feel uneasy; if you don’t buy or sell, you think you’re wasting the opportunity. You have to enter the market to find a sense of presence. You know you need to hold back, yet you let greed lead you by the nose—constantly consuming principal and overstretching your mindset on the wrong timing and the wrong stocks. In the end, while chasing rallies and cutting on weakness, you sink deeper and deeper.

3. Can’t control your hands: having no position is even harder than being trapped
   Retail traders’ biggest enemy isn’t the opponent on the other side of the market—it’s loneliness. Not buying makes you panic; not trading makes you anxious. You see price movement and want to rush in; you see green and assume it’s a reversal. Even if the market isn’t good, you still look for some “sense of presence” for yourself. You hide inner anxiety with frequent trading, and you exchange short-lived thrills for long-lasting entrapment.

Breakeven obsession is the market’s most gentle poison
Breakeven obsession sounds restrained and rational, but in reality it’s the deadliest.
It uses fantasies about the future to cover up the loss of control in the present!
In a持续弱势 market, so-called “getting back to breakeven” is never something you can achieve just by trying harder to trade!
It’s self-deception going against the trend! It will make you stubbornly hold on the wrong stock and in the wrong market environment,
slowly draining your principal bit by bit, grinding down your mindset, and overspending time.
You think you’re waiting to be freed from the trap, but you’re actually being boiled like a frog in warm water.

“I’ll sell when I’m back to breakeven” — I’ve heard that sentence for almost a year now.
When I first arrived on Taoxun, many guys drew big cakes for me: once I’m back to breakeven, I’ll definitely come add J Shen’s gold powder!

Looking back now, the big cake is still there, but the people who promised it are already gone,
It feels like I’m just a spectator, watching one wave of retail traders leaving after another, slowly swallowing the unpredictability along this road…

And the essence of trading: simplicity above all—judging the “water temperature” and knowing when to tighten or release
The most painful summary of this round of market action is exactly a real portrait of countless retail traders: when emotions are bad, they go crazy and trade aggressively with heavy positions! Suffering losses piled up! Then when the market truly becomes hot, they’re suddenly too afraid to bet, worried about expanding losses.

The greatest skill in trading is not complicated techniques or precise stock-picking. It’s judging the market’s “water temperature”—the rhythm of tightening and releasing. Simplicity is the way—nothing more than that.

When the market is sluggish: you must be able to hold back; don’t get arrogant
In a weak market, without sustained buy pressure, everyone can see that the current tape is one-sided—capital isn’t willing to take the baton! The willingness to go long is extremely weak. You can judge it by the number of stocks hitting limit-up and the sectors that lack sustained, ongoing “money-making effects.” What you have instead is a steady stream of selling pressure. At a time like this, the biggest taboo is thinking you’re smart, you can make money against the trend, and you must go heavy with frequent trading, chasing rallies and selling into weakness.
To break out of the trapped situation of “getting back to breakeven,” real高手 are never about fighting against the trend with isolated bets. They first learn to restrain human nature, respect the market, and master the rhythm of tighten/release. When the market is sluggish, control your urge—go to cash or test with a light position. Not losing is winning: preserving your principal completely is the foundation for later profits. Stop obsessing over sunk costs. Floating losses are still losses. Cutting losses early in the initial stage of a decline preserves principal and also preserves the opportunity to wait for a better market. Don’t let a small loss turn into a catastrophic loss you can’t undo. Don’t let unwillingness drag down your entire account.

When the market is hot: you must dare to follow—don’t go against the crowd
When the market arrives, the rushing flood can’t be stopped—capital is willing to take the baton to go long! The number of limit-up boards is clearly much higher than the number of general red days. There is a vehicle with sustained “money-making effects” in the market! The willingness of capital to go long is clearly strengthening! Off-market funds are also willing to come in! When the index starts moving in a positive direction, then you must treat yourself like an idiot and follow the trend. Whether it’s a multi-day board (連板) leader or the trend’s main upswing, you don’t need to confine yourself to a particular “model.” Squeeze into whatever has the money-making effect. As long as the trend hasn’t changed noticeably, don’t try to guess the top or bottom. Follow the market—that’s the real way to follow.

The essence of speculation is this simple: when it’s time to tighten, you can tighten; when it’s time to release, you can release. And most retail traders get the rhythm exactly backwards: when the market is bad, they trade aggressively and burn all their principal to the ground; when the market is good, because of previous losses, they become fearful and timid—they don’t dare to take heavy positions, don’t dare to hold—and in the end they watch opportunities slip away, getting trapped in a dead loop of “the more I lose, the less I dare to make money; the less I dare to make money, the more I lose.”

If you really want to make big money with small capital, then embrace certainty and do subtraction—eliminate all non-certainty. Most retail traders lose money in transactions that aren’t based on certainty, and only a tiny fraction of trades truly earn money by embracing certainty. Because non-certain money has been losing too much in the front end. When real certainty finally appears, the guys themselves don’t dare to believe it. When you should rest, you keep charging with a stiff neck. Then when the true certainty node arrives, when the cycle is established and the main line comes out, the subconscious fear caused by shock after the losses from the last round—the post-traumatic stress-like condition—kicks in and affects your internal core, making you too scared to go.

There’s a joke online about trauma-related stress syndrome, isn’t there. In the main upswing period you’re timid; in the withdrawal phase you swing big punches. Then when the rising market is almost near the end, it’s no longer the best entry point. But the family members have just endured a whole round of missing the train (踏空). They couldn’t stand it anymore, so they kept launching big punches again at the emotional high point! With this kind of repeat, after cutting losses there’s nothing left but endless regret—next time they might keep making the same mistake.

What prop-traders are stronger at than ordinary people isn’t just stock-picking. It’s that they can manage their hands—they understand how to tighten and release.
They can endure the loneliness of being in cash. They dare to cut losses decisively at turning points. They always carry reverence and don’t go against the trend.

Real profitability is never about going all-in stubbornly hard against the market. It’s about restraining human nature, respecting the market, and aligning knowledge with action.
The ultimate wisdom of trading lies in: “attack by holding, and go far by staying steady.”

When the market is good, everyone can get a share;
when the market is bad, even prop-traders can’t exit completely unscathed.
What determines whether your account can survive the cycle isn’t how aggressive the offense is—it’s how strong the defense is during the withdrawal phase.

Top-tier defense is the survival bottom line of trading:
In the market’s main upswing wave, everyone can make money;
Only by being in cash or extremely lightly positioned during the withdrawal phase can you protect profits, and open the path to compounding.

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