21 common psychological traps in Bull Market trading, have you fallen into them?

In cryptocurrency trading, success is closely related to the psychological state of the trader. This article explores 21 common psychological pitfalls to help traders identify and overcome these obstacles to improve trading performance and rational decision-making. This article is from an article written by Route 2 FI and compiled by Vernacular Block. (Synopsis: Mysterious users make more than $100 million on TRUMP, is it "luck" or "insider trading"? (Background added: Is the analysis really reliable in tracking Whale movements as a trading signal?) The psychology of trading reveals the hidden psychological game behind successful cryptocurrency trading. As a trader, your mind can be the most powerful tool – and perhaps the biggest weakness. Your personal biases, such as confirmation bias and overconfidence, can quietly sabotage your financial decisions without you even being aware of them. The most successful traders are not necessarily the smartest, but those who understand their mental patterns, control their emotions, and can make rational choices under pressure. By recognizing how your brain naturally reacts, you can develop discipline, manage risk more effectively, and transform trading from an emotional roller coaster to a strategic, precise operation. Let's dive in! Which segment of the IQ curve do you have, and which Pepe type? Trading psychology reveals the psychological reactions of traders when faced with market events and various factors that affect trading. A trader's state of mind not only determines their trading decisions, but also greatly influences the development of their trading career. As you may already know, the key to success is not high intelligence, but psychological factors such as patience, perseverance, self-discipline, and a healthy mental state. Different traders may react very differently to the same market situation. For example, when the price of BTC ($BTC) drops sharply, some people panic dumping, while others choose to buy on the dip, believing that the price will rebound. Therefore, according to psychological characteristics, traders can be roughly divided into the following categories: 1) Impulsive traders This type of trader does not have careful planning, makes quick decisions, but often ignores the consequences. They are susceptible to emotional influences, leading to potentially huge losses. 2) Cautious traders This type of trader will thoroughly analyze the market situation and their own financial situation before trading, usually emotionally stable, and have good self-management skills. However, they are sometimes too conservative and lack a sense of adventure, and appropriate risk-taking tends to lead to higher returns. 3) Practical Trader Practical traders are both adventurous and analytical at the same time. They know how to manage risk and can trade with confidence. This type of trader is the ideal type: without over-analysis, it is reasonable to assess whether each trade has a positive expected value (+EV). You may have found yourself in these types and can reflect on how your psychological traits affect trading results. There is no doubt that trading psychology is an integral part of trading success. 2. Trading bias Trading bias is a cognitive error that may occur in the decision-making process of traders, which usually significantly affects trading performance and final results. Here are a few common trading biases: 1) Confirmation bias Traders tend to look for information that supports their pre-existing views while ignoring evidence that contradicts them. This bias can lead to bad decisions or overtrading. For example, let's say you hold a lot of Ethereum ($ETH). More often than not, you might look for information on platforms like Crypto Twitter that supports "Ethereum is a good asset" without researching why Ethereum might not be the best choice. As a result, you're more likely to be exposed to content that aligns with your existing views than to make a comprehensive and objective assessment. Trading psychology not only helps you better understand the market, but also allows you to understand your own behavior patterns and help improve trading performance. 2) Availability bias In cryptocurrency trading, availability bias is when investors make decisions based on easily recalled or recently obtained information, rather than through comprehensive analysis. A typical example is when a trader rushes to buy a certain cryptocurrency because it is frequently mentioned on social media or news platforms, regardless of its fundamentals. For example, if a particular altcoin explodes on Twitter due to celebrity endorsements or viral Internet memes, traders may overestimate its potential and invest heavily in it, although the coin may lack a solid technical foundation or practical use cases. This bias can lead to poor investment decisions, as readily available information does not necessarily accurately reflect an asset's true value or long-term prospects. Another example is when traders overreact to recent market events. If the price of BTC suddenly spikes, the availability bias may lead investors to think that such quick gains are common and easy to achieve, and to trade overly optimistically. This can lead to chasing short-term trends while ignoring more stable long-term investment strategies. 3) Anchor bias In cryptocurrency trading, a classic example of anchor bias is when investors buy BTC at $100,000 at a market high, they still hold on to the "$100,000" anchor price even if market conditions change and the price drops significantly. This psychology can lead to the following bad decisions: Sticking to the position when it is obvious to sell, hoping that the price will return to $100,000. Ignore new market information or analysis and believe only in your obsession with the $100,000 price. Anchor bias can lead to huge financial losses as traders fail to adapt to market changes, miss out on stop losses or profit at lower prices. Another common anchoring bias is related to net worth numbers. As a trader, you are exposed to profit and loss (PnL) fluctuations on a daily basis. Let's say your encryption net worth is $100,000. If you lose $20,000, it's easy to get caught up in the fact that your account shrinks and find it hard to get back to where you were. This mindset can lead you to take an overly defensive approach to the market, and even if there seems to be a potential trading opportunity, you reduce your risk for fear of losing money again. 4) Loss aversion bias Traders usually feel the pain of losing more than the pleasure of making a profit, which often leads them to hold losing positions for too long or close out profitable positions too early. Loss aversion bias is particularly evident in encryption trading. Suppose a trader buys BTC for $100,000, expects the price to rise, but drops to $80,000. Although market indicators indicate that the price may continue to fall, traders are reluctant to cut loss, hoping that the price will return to their buying point. This reluctance to stop loss stems from the psychological pain of realizing losses, even if the trend is clearly unfavorable. Another manifestation is that when a coin rises by 10%, traders will quickly dump to lock in gains, fearing profit taking; And when a coin fell by 20%, they were slow to sell, holding on to the illusion of price Rebound. This behavior reflects the fact that traders feel much more pain about losses than they do for the same gains. In the volatility of the encryption market, loss aversion can lead to: Holding underperforming assets for a long time. Missed other potential profit opportunities. Increased emotional stress and irrational decision-making. To be honest, this is one of the classic traps I fall into every day. For example, now I'm working on Short some weak altcoins. If I'm currently making a profit of $10,000, but the price pulls back slightly, causing the profit to drop to $5,000, I tend to fall into the "never close position if I don't reach more than $10,000." Because it made me feel like I lost $5,000, even though the deal was still ...