"Losing big and winning small" is indeed a true reflection of many contract traders in the cryptocurrency space. Behind this is not a matter of luck, but an inevitable result of a series of profound human weaknesses, cognitive biases, and market laws.

The following are the core reasons for this phenomenon:

1. The traps of human nature and psychology (this is the main reason)

· Disposition Effect:
· In terms of "big losses": When there are losses in a position, people tend to "hold on stubbornly," unwilling to cut losses, always thinking, "What if it rebounds or drops back?" This kind of wishful thinking can cause small losses to snowball, ultimately leading to unbearable massive losses.
· In terms of "small profits": When positions show profits, people become unusually fearful, afraid that the profits in hand will disappear, and thus they are eager to "secure the gains" by closing their positions at the slightest profit. The result is that you successfully captured a small fluctuation but missed out on the potentially huge trending market that may follow.
· Loss Aversion: The pain people feel from losses is much greater than the pleasure derived from equivalent gains. This means that to compensate for the pain of losing 1000 yuan, one needs to earn 2000 yuan. This mindset makes you more reluctant to let go when incurring losses and more timid when making profits.
· Hope and Fear:
· When you are at a loss, you are governed by "hope": hoping that the market will reverse, allowing you to break free and even make a profit.
· When making a profit, you are controlled by "fear": Fear of market corrections makes your unrealized gains disappear.

2. The "Double-Edged Sword" Effect of Leverage

The core of contract trading is leverage, but it is a double-edged sword.

· Amplified Losses: Even if the market only experiences a small fluctuation unfavorable to your position, due to high leverage, your margin may be quickly consumed, leading to forced liquidation (margin call). You may not even have the opportunity to "hold on" before being swept out by the system.
· Difficulty with volatility: Even when you're heading in the right direction, high leverage makes it hard to withstand normal price pullbacks along the way. A small reverse fluctuation could trigger your stop-loss line or cause you to exit early out of fear, resulting in "small gains."

3. Incorrect Position Management

· Adding to positions when in loss (averaging down): This is one of the most dangerous behaviors. Continuously adding to positions in the wrong direction is akin to repeatedly jumping into a pit of fire. The intention is to lower the average cost, but the result is that your total risk exposure becomes extremely large. Once the trend continues to move against you, you will face a devastating blow.
· Light position during profitability: Due to fear, one might only use a very small position to tentatively make the right direction. Although the yield seems high, the absolute profit is very small. When there are losses, in order to recover faster, one might take a heavy position, resulting in a huge absolute loss.

4. Characteristics of the Market Itself

· "Fat Tail Effect": The cryptocurrency market is known for its extreme volatility. Most of the time, it may experience chaotic fluctuations, but during a few periods, significant one-sided trends (fat tails) can occur.
· The consequences of "making small profits": You keep buying high and selling low in a volatile market, making some small money. But once a huge one-sided market starts (whether up or down), if you misjudge the direction or exit too early, all your previous small profits could be wiped out in a single trade, or even lead to liquidation. This is a typical case of "catching a falling dagger with a needle tip."
· Unpredictability of trends: No one can accurately predict tops and bottoms. When you close a profitable position too early, the market may continue to run far in the original direction, and you can only watch helplessly, ultimately chasing highs or cutting losses in regret, thus falling into another cycle of losses.

5. The Lack of Trading Strategies and Discipline

· No clear stop-loss and take-profit plan: Most losing traders trade based on feelings. They do not think about "If I'm wrong, where will I cut my losses?" (stop-loss) and "If I'm right, where will I take my profits?" (take-profit) when entering a trade.
· Failure to Execute Plan: Even when a stop-loss is set, it is often manually canceled when the price actually reaches it, opting to "wait a little longer"; this is where the tragedy begins.

Summary and Metaphor

You can think of contract trading as a game of "catching turtles":

· You caught a bunch of "rabbits" (small profits), they run very fast, and you easily caught and sold them.
· But you accidentally picked up a "turtle" (small loss), you think it runs slow, that's okay, just hold on to it for now.
One day, you suddenly find that this "turtle" has turned into a "crocodile" (huge loss), and it turns around and bites you, causing you to bleed profusely and unable to escape.

How to break the curse of "losing big and winning small"?

1. Strictly adhere to discipline: This is the first priority. "Cut losses, let profits run" is the only antidote to this ancient adage.
2. Always set a stop loss: You must set a stop loss order at the same time as opening a position, treating it as a "fire door" that must be executed unconditionally. Your survival is more important than any single opportunity.
3. Use a positive expectation trading system: For example, if your stop loss is 50 points, then your target profit should be set at least at 100 points or above. This way, even if your win rate is only 40%, as long as you catch one big trend, you can cover multiple small losses and achieve profitability.
4. Use leverage with caution: Use a low leverage that you can psychologically handle. Leverage is not meant for risking your life, but to enhance capital efficiency.
5. Manage your positions well: Never bet everything on a single position. After a loss, do not impulsively increase your position in an attempt to recover.

Finally, remember this: in the contract market, staying alive is more important than making quick profits. Overcome the weaknesses of human nature and trade with systems and discipline rather than emotions; this is the only way to move from "losing big and winning small" to achieving consistent and stable profits.