The Most Common Cognitive Pitfalls for Ordinary People

1. Pitfall 1: The market will always come back, and holding on will get you out of a losing position
Holding on to a losing position in futures trading is a major taboo. Wicks and extreme one-sided moves are common in crypto markets. If you don’t wait for a rebound, you can be liquidated directly, losing your entire principal—there is no such thing as “playing dead and waiting to break even.”
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2. Pitfall 2: The higher the leverage, the faster you make money
Leverage only magnifies profits and losses; it does not increase your win rate. With high leverage, even a small adverse move can trigger liquidation.
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3. Pitfall 3: Double down on a losing position to average down the cost
In a one-sided market, adding to a losing position increases the margin used and multiplies the liquidation risk. This is a typical way to quickly lose all your funds.
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4. Pitfall 4: Hedging a losing position = safely getting out of a losing position
Hedging only temporarily locks in floating losses; it does not reduce the losses. If you misjudge the market when unwinding the hedge, you can easily lose on both sides, making the situation harder to handle the more you hedge.
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