So without a second thought, I placed a small short position. What was the result? This thing turned around and rose by 50%, and my position was immediately blown up.
Similar stories have played out in my experience, so many that I can’t even be bothered to count. After spending so long in this market, I’ve come to a seemingly simple yet costly truth: never short the coins on the gainers list, especially those that are surging fiercely.
This is not a textbook trading theory. This is a lesson bought with real money, a bloody lesson.
Why has the gainers list become the graveyard for bears?
The coins on the gainers list that look tempting are actually traps for short sellers, one after another. These coins are mostly driven by market sentiment, and when a large number of retail investors rush to chase the gains, the price can easily deviate from rational ranges. At this point, shorting is like reaching out to catch a knife falling from the rooftop — blade up, you won't die but you will lose some flesh.
Another core issue: circulating supply. These coins are usually small cap. Do the big players want to pump it? It's a matter of minutes. While you're still hesitating whether it has peaked, they just have to move a finger and the entire market's buy orders are triggered. At this point, shorts have already become live targets.
Volatility and liquidity are even more powerful weapons. The pullback you see might just be a routine washout during the upward process. Market conditions change rapidly, with false breakouts and false breakdowns everywhere, and there's no way to guard against them.
The tuition I have paid.
In 2024, I incurred a significant loss once. A certain meme coin surged 400% in one trading day. At the time, I was looking at the K-line chart, thinking this is definitely a crazy top, and shorting would surely be profitable. However, as soon as I opened my short position, the coin surged another 40%. The following story you can probably imagine — my stop loss was hit in tatters, and that loss wiped out several months of my earnings.
There are many similar situations. The gainers list is like a huge vampire, specifically draining those who seem shrewd but are actually greedy short sellers.
I later understood that the coins on the gainers list often represent extreme market sentiment, not rational trading opportunities. Among the participants, the retail investors chasing gains make up the absolute majority. As long as there are enough buy orders, the price can continue to rise, and logic here becomes almost ineffective.
So what about me now? When I see coins on the gainers list soaring, I either completely avoid them or follow the trend of chasing gains, but I absolutely won't bet against it.
This lesson has greatly changed my trading style. I learned what it means to respect market sentiment, rather than always trying to be the smart one. Sometimes the market's 'irrationality' can last longer than your account's bankruptcy time.$RIVER
