The Scarcity Trap

Not financial advice.

I’ve held my ETH position at relative breakeven for almost two years. Dead money. No movement. Just sitting there like a zombie in my portfolio while the rest of the market ran laps around me.

Cursed ahh chart

Now it’s finally showing some decent PNL, but that doesn’t change the fact that it was probably one of the worst trades of my career. Not because of the entry or the thesis but because I couldn’t bring myself to cut it and redeploy that capital somewhere productive.

This is scarcity mindset in action. I was so terrified of “giving up” that I’d rather watch my money do absolutely nothing for two years than admit I was wrong and find a better opportunity.

You can see it everywhere. Traders sabotaging themselves not because they can’t read charts or time entries, but because they can’t make clean decisions about money.

I know a trader who made $2 million in the 2021 bull run. Lost it all by 2022. Another who panic-sold his entire bag at the first -30% dip, then watched it 50x while he sat in stablecoins. Same psychological programming, different disasters.

Watch any trader long enough and you’ll see the same broken pattern. They make solid gains, then sabotage themselves because they can’t trust their own decision-making. A 40% pump becomes a 20% loss because they held too long. A 10x runner gets sold at breakeven because they couldn’t believe it would keep gassing upwards. A trader who diamond hands a shitcoin to zero becomes the same one who panic sells the next runner because he grew up thinking “a bird in the hand is worth two in the bush.”

I’ve done both dances. Not the diamond hands bullshit or the paper hands panic but I’ve watched enough good setups turn into regret to recognize the real pattern. Sometimes I held too long. Sometimes I sold too early. The common thread wasn’t my strategy or my analysis.

It was fear.

It’s not conviction. It’s not discipline. It’s not believing in the technology.

As cringe as it might sound, it’s probably childhood trauma.

The Invisible Cage

I think most trading mistakes are really scarcity stories. Every “HODL through the pain” tweet and every “I sold too early” group chat message is someone who grew up thinking opportunities like this don’t come twice. Every trader who can’t make clean decisions is usually someone who learned early that money is scarce and precious and you better not waste your one shot.

Most traders I know grew up with that middle-class anxiety where you check your account before buying groceries. Where your parents fight about bills. Where every dollar feels precious because there might not be another one coming.

That shit follows you into trading like a curse.

Picture this: You make a 40% gain on some trade. Your scarcity brain starts doing the math. “If I hold just a little longer, this could be life-changing money.” So you hold. And hold. Watch your gains evaporate because you couldn’t accept that 40% was enough.

Or the opposite: You make a 40% gain and your scarcity brain whispers, “Take it and run. You might never see green again.” So you sell, then watch it run to 400% while you’re sitting in cash, kicking yourself for not trusting the setup.

Scarcity brain choosing financial trauma over financial freedom

Both responses come from the same place: the belief that opportunities are finite and precious.

Behavioral economists have studied this for decades. When you grow up with financial stress, your brain wires itself to see every decision as potentially catastrophic. Your childhood programming is running your trading account, and it’s probably costing you money.

The Abundance Asymmetry

Meanwhile, there’s another type of trader in these markets. Usually grew up with money, or at least financial stability. They make decisions like it’s nothing. Hold winners, cut losers, size positions appropriately. No emotional attachment. No “what if” spirals.

They genuinely believe more opportunities will come. Many of us don’t.

The abundance trader thinks: “I’ll let this winner run and manage my risk appropriately. There’s always another trade.” The scarcity trader thinks: “This might be my only shot at financial freedom, so I need to either lock it in immediately or ride it to zero.”

One of these approaches builds wealth. The other builds anxiety.

Why Everyone’s Making Bad Decisions

The most expensive lie in crypto isn’t “diamond hands” or “always take profit.” It’s the idea that there’s one right answer to every trade.

Really, I think we’re just scared. Scared of missing out. Scared of being wrong. Scared that if we make the wrong move, we’ll never get another chance like this.

You see this everywhere. Traders who you might call The Maximizer - can’t make clean decisions because every trade needs to be the one that changes everything. They hold winners too long and turn them into losers. They sell winners too early and watch them moon. They keep adding to positions instead of managing risk. They treat every decision like it’s irreplaceable.

They’re trading their childhood trauma, not the market.

The Real Cost of Thinking Small

Scarcity mindset doesn’t just affect your trading - it affects your entire relationship with money and opportunity.

I once made a 5x on a position and couldn’t bring myself to take any profits. Watched it bleed back to breakeven over three months because I was paralyzed by the fear of “selling too early.” But I’ve also panic sold winners at 30% gains that went on to 10x because my brain couldn’t believe I deserved the ride.

The scarcity brain creates specific types of self-sabotage:

Decision Paralysis - You can’t decide when to buy, sell, or hold because every choice feels like it could ruin everything. You freeze up instead of managing risk dynamically.

Binary Thinking - You see every trade as either “diamond hands forever” or “take profits immediately.” You can’t scale in and out of positions because you don’t trust yourself to make multiple good decisions.

Risk Distortion - You either risk everything on one trade or risk nothing meaningful. You can’t find the middle ground where real wealth is built.

The Abundance Hack

The fix isn’t necessarily therapy or meditation, although I found the latter definitely helps. It’s convincing your brain to see money as a renewable resource instead of a finite one.

Start asking yourself: “What would someone with $10 million do in this situation?” I guarantee they’re not holding through 80% drawdowns because they “believe in the technology.” But they’re also not selling the first 20% of a bull run because they’re scared of volatility.

Large bankroll traders with experience don’t get emotional about individual trades. They think in terms of risk management and position sizing, not absolute returns. They’d rather make consistent decisions than chase perfect ones.

What Actually Works

This is what I wish someone had told me five years ago, and what I see working for the traders who actually make it:

Think in scenarios, not absolutes. Set multiple profit targets and risk levels before you enter trades. Don’t let scarcity brain convince you there’s only one right move.

Size your trades like you’re already wealthy. If you had $1 million, would you risk 100% on a single altcoin? Then why are you doing it with your $10k account?

Practice dynamic risk management. Take some profits when you’re up big. Add to positions when you’re right. Cut losses when you’re wrong. Stop treating every decision like it’s permanent.

Calculate opportunity cost. Every dollar tied up in a dead trade is a dollar not working for you elsewhere. Every dollar you panic sell is a dollar that could have compounded.

The Compound Effect

Abundance thinking makes you more money than scarcity thinking. The desperate energy of trying to make every trade perfect usually results in making fewer good trades overall.

When you start thinking abundantly, you make better decisions. You take some profits when appropriate. You let some winners run. You cut losses. You wait for good setups. You stop revenge trading. You stop FOMOing into narratives at the top.

All these small decisions compound. Instead of the boom-bust cycle of scarcity trading, you start building steady, consistent wealth.

The market rewards patience, discipline, and strategic thinking. It punishes desperation, greed, and emotional decision-making. Your mindset determines which category you fall into.

Breaking the Cycle

I still struggle with this. Even now, with a bigger account and more experience, I sometimes catch myself making decisions from fear instead of logic. The scarcity programming runs deep.

But I’ve learned to recognize it. And I see the same pattern in every trader who makes the transition from consistently losing money to consistently making it.

The first step is recognizing that your scarcity mindset exists. It’s not your fault - it’s conditioning from childhood experiences with money. But it is your responsibility to fix it.

Heal and Win

Your relationship with money was formed before you could walk, and it’s probably costing you money in every trade you make. The scarcity mindset is poverty thinking disguised as strategy.

I learned this the hard way. Lost more money making fearful decisions than I ever did making logical ones. Turned more winners into losers by overthinking than I ever did by following my plan.

And I think this pattern destroys more traders than any poor technical analysis or market crash.

Your childhood programming is not your trading destiny. But you have to recognize that your scarcity mindset is the real enemy. Not the market. Not the whales. Not the manipulation.

Your broke brain is keeping you broke.

Fix that first. Everything else is just tactics.

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