Recently, I’ve noticed that many novice investors around me are often completely confused by the phrase “cutting leeks,” so I decided to organize my understanding and share it with everyone. The meaning of “cutting leeks” is actually that retail investors are trapped by market insiders and end up losing money. It sounds harsh, but it really is a common pattern in the investment world.

Why use leeks as a metaphor? This comparison is actually quite fitting. Leeks are a kind of plant that grows fast and is full of vitality. After being harvested, they can grow back again and again—just like retail investors in the market. A wave of losses makes some exit, and then a new wave comes in, repeating endlessly. And “cutting leeks” refers to those big players, institutions, or market makers using their informational advantage and the scale of their capital to make retail investors lose money through various tactics.

I’ve observed several of the most common “cutting leeks” methods. First is “ramping up and distributing.” The market maker quietly builds positions at low levels, and then pushes up the stock price through coordinated buy-and-sell activity. At the same time, they pair it with “good news” circulated through social media communities. Retail investors, afraid of missing out (FOMO), rush in—only for the market maker to unload at high prices. The stock then crashes and falls sharply in an instant, and the retail investors become the ones left holding the bag. Another even worse tactic is “pig butchering” scams: disguised as investment mentors, they use fake profit screenshots to lure retail investors into trading on small platforms, and then they run off with the funds.

Besides that, using information asymmetry is also a common play. Some people take advantage of early opportunities to lock in profits first, while retail investors are still kept in the dark. In the crypto world, it’s even more rampant: teams behind “air coin” projects hype their potential to attract money, then withdraw liquidity from the liquidity pool—causing the token to instantly drop to zero.

So how can you tell whether you’ve become a leek? I’ve summarized several typical signs. Chasing the crowd to buy is the most common—buying whatever others are buying without doing any homework. Lack of understanding is also a major problem: being clueless about the market, unable to read the fundamentals and technicals, and making decisions purely by guessing. Another is not knowing how to take profit or cut losses. When you’re making money, wanting to make even more causes you to miss your sell point; when you’re losing money, you’re unwilling to cut, and in the end you lose more and more. Buying high and selling low is a classic leek move: being carried along by market sentiment, rushing in when prices are high, and getting scared out when prices are low.

Then how do you avoid it? My experience is that you need to form your own investment methodology. Before investing, you must understand the rules of the game. Don’t blindly follow the crowd—learn to analyze the market and the underlying situation of the asset. As Buffett puts it: “Be fearful when others are greedy, and be greedy when others are fearful.” In a bear market, it’s “buy, buy, buy”; in a bull market, be cautious.

Second, learn how to take profit and cut loss. Set a goal for yourself—for example, exit decisively once you’ve gained 30%, and lock in your profits. If your losses reach a certain percentage, you must also be willing to cut them. Many trading platforms have stop-loss functions; using them can help you avoid a lot of losses.

Diversification is also crucial—never put all your money into a single asset. At the same time, you can consider combining short and long positions. Even when the market is falling, there may still be opportunities to profit.

You also need to stay on top of market information in a timely way. You should look at both technical and fundamental factors. Especially once you miss major news, you may go from making money to losing money. Many trading platforms now have built-in tools such as an economic calendar, real-time news, and sentiment indexes. While trading, you can get the first-hand market information—much faster than searching for information everywhere on your own.

Finally, you must choose legitimate and compliant large platforms. Never listen to recommendations from unclear, unverified “mentors” telling you to trade on small platforms—that’s basically jumping into a pit of fire. Only when your funds are safe and protected does investing become meaningful.

To be honest, it’s very hard to completely avoid being “cut,” but doing the things above can greatly reduce your risk. Investors who have already been “cut” also need to adjust their mindset—review your trades, and make sure you don’t repeat the same mistakes next time. The path of investing requires accumulating experience and knowledge—there are no shortcuts, but rational thinking can help you avoid a lot of detours.