In crypto contract trading, the phenomenon you mentioned—“unable to hold onto profitable positions, but stubbornly holding onto losing ones”—is extremely common. It involves factors at multiple levels, including trading psychology, market characteristics, and cognitive biases. Understanding these reasons is the first step toward rational trading.

I. Core Reasons Analysis

1. The Domination of Human Nature and Emotions

· Unable to Hold Profitable Positions: Rooted in “Fear”
When there are floating profits in the account, the strong fear of “locking in profits” and “being afraid of giving back gains” quickly takes over. The crypto market is highly volatile; profits can double or evaporate within minutes, which amplifies anxiety. To eliminate this discomfort, traders tend to close positions immediately to secure certain, even if meager, profits. This is essentially “risk aversion” manifesting when in profit.
· Stubbornly Holding Losing Positions: Rooted in “Hope” and “Loss Aversion”
· Loss Aversion: Behavioral finance shows that the pain of losing is far greater than the joy of an equivalent gain. When floating losses occur, closing the position means turning paper losses into real ones, causing significant psychological pain.
· Wishful Thinking and “Hope”: There is always the hope that the market will “turn around,” giving a chance to break even or even turn a loss into a profit. Thoughts like, “What if it rebounds?” or “I’ve held out before and made it back” keep recurring.
· Sunk Cost Fallacy: The funds, time, and emotion already invested make it hard to let go, leading to thoughts like “let’s wait a bit longer,” resulting in deeper losses.

2. The Uniqueness of the Crypto Market Intensifies This Mentality

· Extreme Volatility: 24/7 trading, news-driven moves, and high leverage lead to drastic and rapid price swings. This environment continuously stimulates traders’ nerves, amplifying greed and fear.
· “Get Rich Quick” Narratives and FOMO: The crypto space is full of stories of “100x overnight” gains, causing traders to have extremely high and unrealistic expectations for their profitable positions. But when a trade is actually profitable, fear of losing it makes them afraid to hold on. At the same time, when losing, they think, “Others have held out and recovered; I can too.”
· Lack of Intrinsic Value Anchors: Unlike traditional stocks, many cryptocurrencies lack clear valuation models; prices are driven mainly by sentiment and capital flows. This makes traders more susceptible to market noise and more likely to lose their decision-making foundation.

3. Lack of Trading System and Cognitive Framework

· No Clear Trading Plan: Positions are opened without setting clear take profit, stop loss, target prices, or holding times. Everything is done by feel, so it’s natural to be led by intraday fluctuations.
· Imbalanced Risk-Reward Ratio: Many trades are “risking $1 to make $0.20.” With this risk-reward ratio, you need an extremely high win rate to be profitable, which increases the tendency to cherish every profit (so you close early) and to be unwilling to accept every loss (so you hold on).
· Over-focusing on Account Balance Instead of Trade Quality: Constantly watching the profit and loss numbers fluctuate, with emotions rising and falling accordingly, rather than focusing on whether price action matches your analysis.
· The Curse of Leverage: High leverage magnifies both gains and losses, as well as emotions. Even a slight fluctuation can trigger liquidation lines or result in large floating P&L, forcing you into irrational decisions.

II. How to Overcome It?—Build Your “Rational Defense Fortress”

1. Establish and Mechanically Execute a Trading System

· Plan Your Trade and Trade Your Plan: Set your stop loss and take profit (or trailing stop) levels unconditionally before entering a position. This is the most important discipline. A stop loss isn’t a judgment about the market, it’s the “insurance premium” and “survival cost” you pay for the trade.
· Use a Reasonable Risk-Reward Ratio: For example, aim for at least a 1:2 or 1:3 risk-reward ratio. This means you’re willing to risk 1% to aim for a 2%-3% profit. Even with a 50% win rate, you can be profitable long-term. A good risk-reward ratio fundamentally solves the problem of “unable to hold profits” because you have enough profit space and won’t close positions for tiny gains.
· Use a “Scaling Out” Strategy: For example, close part of your position at the first target, move your stop loss to breakeven, and let the remaining position ride for bigger profits. This locks in some profits while giving room for the trend to develop.

2. Deep Self-Awareness and Psychological Training

· Acknowledge and Accept Losses: Losses are an unavoidable part of trading. Successful traders don’t avoid losses—they cut them quickly and let profits run.
· Keep a Trading Journal and Review Regularly: Record every trade’s entry/exit reason and emotional state. Regularly review to identify patterns of “unable to hold” and “stubbornly holding.” You’ll find that most “stubbornly held” trades end with greater losses.
· Practice “Simulated Emotion” Drills: Before entering a trade, ask yourself: “If this trade immediately moves X% against me, can I stop out without hesitation?” If not, don’t enter, or reduce your position size to a level where you can calmly accept the loss.
· Step Away from the Screen and Trade Less Frequently: Over-monitoring is a main driver of emotional trading. Set alerts and go do something else. High-frequency short-term trading is a shortcut to “self-destruction” for most people.

3. Technical and Management Assistance

· Use Exchange “Conditional Orders”: Set take profit and stop loss orders in advance so the system executes for you, avoiding emotional interference during manual operations.
· Strictly Control Position Size and Leverage: Never use a position size or leverage that keeps you up at night. Beginners are advised to start with very low leverage (e.g., 2-5x) or even no leverage.
· Practice Capital Management: Limit each loss to no more than 1%-2% of your total capital. That way, even after 10 consecutive stop outs, you only lose 10%-20% and your mindset won’t collapse.

Summary

In the crypto derivatives market, “unable to hold profits, stubbornly holding losses” is essentially a conditioned reflex of human weakness in a highly uncertain environment. Beating it isn’t about beating the market—it’s about beating yourself.

This requires a process:

1. Cognitive Awakening: Realize the prevalence and seriousness of the problem.
2. System Building: Establish objective, quantifiable trading rules to replace subjective judgment.
3. Disciplined Execution: Execute your system like a machine, isolating emotions.
4. Continuous Iteration: Optimize your system and mindset through regular reviews.

Remember, the market will always be there, and opportunities will always exist. But you only have one principal. Protecting your principal and controlling risk are the only ways you can survive and profit in this game over the long term. When you’re no longer swayed by the profit and loss of a single trade, but focus on the stability and execution of your long-term trading system, you’ve already surpassed the vast majority of traders.