The Two Words That Almost Destroyed Me

People constantly ask me, Lao Li, how do I make a profit? Almost nobody asks, Lao Li, how do I avoid losing everything? If the words 'break even' are still in your head, stop everything right now and reset your mindset. Those two words are the express lane to bankruptcy, because they push you to bet your last money at the worst possible moment.

I know this because I almost destroyed myself on exactly those words. In 2019, the bear market was brutal. I had done reasonably well in the first half by trading rebounds, but by the end of the year Bitcoin kept falling and I started losing. I kept telling myself to hold on a little longer, just until I got back to breakeven, then I would leave the market. Because I had already lost a lot, I was anxious and impatient. So I added leverage, hoping one bounce would take me back to zero and I could walk away.

Instead, I blew up. I lost everything and even ended up owing a large amount of money. I was mentally broken. I seriously thought about quitting crypto and going back to my import/export business, because at least that work would not make me lose money. I can tell the story calmly now, but that feeling of despair is something I will never forget.

Loss Aversion: Why a $100 Loss Feels Bigger Than a $100 Win

Behavioral economists call this loss aversion. The pain of losing $100 is far greater than the pleasure of gaining $100. In the market, that pain turns into a dangerous behavior: you refuse to close losing positions. You tell yourself the loss is temporary and the coins in your portfolio were already yours. It is like sitting in a casino and treating your chips as household savings.

The moment you think I will leave as soon as I break even, you hand your decision-making over to your ego. You are no longer trading on data. You are demanding that the market prove you were right. But the market does not care who you are, and it will not cooperate with your story.

Desperation Makes You Easy Prey

This obsession with breakeven not only ruins your own trading, it gives manipulators a handle to harvest you. When you are red-eyed and desperate for a quick turnaround, you stop being an investor and become prey.

A recent CertiK security alert illustrates this. A protocol lost more than $5 million after users unknowingly granted token approvals to a malicious contract. The attackers did not need to steal private keys. Users authorized the contract themselves, often thinking they could revoke the approval later. But before they got around to it, the funds were gone.

This kind of thing is common in crypto. When you are rushing to get in, you do not read approval prompts word by word. Under the double pressure of FOMO and losses, your judgment drops. You keep thinking, if I do not buy now, the price will run away. You never stop to ask whether the project might be fake. Crypto is a place where cognitive biases get amplified, and predators know exactly how to exploit that.

The Monkey That Flips Ten Heads in a Row

Some people who look like geniuses are just lucky monkeys. If you put enough monkeys in a room and have them flip coins, one of them will flip ten heads in a row. Would you believe that monkey has mastered coin flipping? Of course not. But in crypto, that monkey immediately starts a livestream and sells you a wealth code and investment fundamentals.

Look at the cycles: 2017 ICOs, 2020 DeFi, 2021 NFTs. After each wave, roughly 80 percent of projects disappear completely. The people who survive and cross cycles share one trait: they have independent judgment and a deep respect for risk control. They understand that lost profits can be earned again, but if your principal and your logic are gone, you are off the table.

A so-called opportunity that requires you to sacrifice basic risk control is not an opportunity. It is bait on a harvesting machine.

A Survival Framework: Anchor, Time, Rules, Conviction

After my 2019 blowup, I rebuilt my approach around four simple ideas. They do not eliminate emotion, but they keep it from running the show.

  • Value anchor: Buy something because you believe its underlying logic is valid. If the logic holds, short-term price swings are noise. If the logic breaks, you exit regardless of the price.
  • Time horizon: Decide before buying how long this money can stay invested. Do not turn a short-term trade into a long-term position just because it is losing. Do not dump a long-term position after a tiny gain.
  • Pre-set rules: Set your rules before you enter, while you are calm. When you are in a drawdown, you are not calm. Execute the rules you made earlier.
  • Conviction: Know why you are in this market. Making money is not enough. Many people who bought Bitcoin in 2013 sold in 2017 because they only had expectation, not conviction. Expectation is thinking the price will go up. Conviction is believing the technology can change the world, even if the price goes to zero, and not regretting it.

The Real Game Is Survival

Crypto will magnify every weakness in your psychology. It will tempt you when you are down and whisper revenge trades when you are desperate. The people who survive accept that they cannot conquer human nature, so they set rules in advance and follow them.

In the hardest moments, the market does not ask who made the best prediction. It asks who is still alive.