The daily chart of the cryptocurrency market actually tells just one story—greed and fear constantly battling each other. The frenzy during rapid rises, the despair during sharp declines—these dramas play out year after year. But what truly determines victory or defeat isn’t some complex technical analysis; it’s the set of emotions hidden in everyone’s heart.

Let’s talk about the three most common psychological pitfalls for investors:

**Overconfidence is the most dangerous.** Especially deadly in a bull market. After making a few profitable trades, your brain starts to release dopamine, and you become overly confident, thinking you’ve mastered the market’s rules. The result is often opening positions with too much leverage and stacking too much on, then when a sudden event hits, your account is wiped out.

**Herd mentality is amplified tenfold by social media.** Everyone’s talking about a certain coin, and FOMO kicks in—fearing to miss out on the next big move. Everywhere in the market, you hear “This time is really different,” but look at history? Bubbles always burst eventually. The problem is most people are confidently convinced they can escape before the crash.

**Loss aversion can paralyze you.** Psychology has long proven that the pain of losing money is twice as intense as the pleasure of making money. So many prefer to hold onto a declining coin, fantasizing about breaking even, rather than decisively cutting losses and seeking more promising opportunities.

How to break the cycle? Here are four practical tips:

**First is position management.** Divide your funds into two parts: a core position for long-term holdings of projects you believe in, and a tactical position for short-term trading and testing. Also, set a maximum proportion for each asset. This way, even if something unexpected happens, it won’t damage your fundamentals, and your mindset can stay stable.

**Second is writing a decision checklist.** Don’t trade based on feelings. Before the market moves, clearly write down your buy points, sell points, and stop-loss levels. When the critical moment comes, follow the plan. This helps you avoid emotional traps.