What it feels like to be "harvested" in the investment market: 6 ways to help you avoid loss traps

In the fields of stocks, funds, cryptocurrencies, and other investments, the term “cutting leeks” is a frequently mentioned concept. Many investors, after experiencing losses, jokingly refer to themselves as “leeks.” But where does this expression come from? Who is more likely to become the target of being “cut,” and who is actually conducting these operations? Understanding these underlying market logics is crucial for protecting your own investment capital.

The True Meaning of “Cutting Leeks” in Investment

Leeks are plants with strong vitality—they regrow after each harvest. This characteristic is used as a metaphor for phenomena in the investment market. “Cutting leeks” refers to the behavior of large investors or institutions who, with informational and capital advantages, manipulate the market to lure retail investors into trading, ultimately profiting from their losses.

The funds lost by retail investors are like the cut leeks, while new investors continuously enter the market, creating a cycle. This phenomenon is especially common in immature markets, such as stock markets, futures markets, and foreign exchange markets.

Target of being cut: inexperienced retail investors

Compared to large investment institutions, retail investors are at a disadvantage in terms of information access, investment experience, and capital scale. They often enter with the mindset of quick profits, follow the trend, and end up trapped in a vicious cycle of “buying high and selling low.”

Perpetrators: market makers and institutional investors with advantages

Market makers or large institutional investors leverage their informational and capital advantages by creating market illusions, inducing retail investors’ emotional fluctuations, and executing sell-offs at appropriate times to profit from retail investors’ losses.

What are the typical signs of people being “cut”?

1. Blind following

Many retail investors lack independent judgment. Seeing others making money, they rush to follow, jumping into popular trends without conducting any fundamental research. This often leads to entering at high points, buying questionable assets.

2. Incomplete knowledge structure

Investment novices have limited understanding of how the market operates; they neither understand fundamental analysis nor can they interpret technical charts. When making decisions, they are easily influenced by market volatility and others’ advice, making it hard to judge rationally.

3. Lack of discipline in taking profits and cutting losses

Many retail investors want to make more money when they are profitable, missing the optimal exit points; when losing money, they are reluctant to cut losses, always holding onto the hope of “waiting for a rebound,” which results in increasing losses.

4. Buying at high and selling at low

Driven by market sentiment, they blindly buy when prices are high and panic-sell when prices fall, perfectly illustrating the “chasing gains and selling at a loss” loss pattern.

Typical process of market makers “cutting leeks”

This phenomenon usually occurs at the end of a bull market or the beginning of a bear market. During the mid-stage of a bull market, market makers and retail investors enjoy the gains from rising prices together. However, in the late stage of the bull market, market makers, leveraging their informational advantage, start to gradually exit. Meanwhile, new retail investors remain confident and continue to enter, becoming a new batch of “leeks.”

At the start of a bear market, market makers create a temporary rebound to give the illusion of a bottom, attracting retail investors. Meanwhile, existing retail investors, doubting the trend reversal, continue holding, ultimately being repeatedly “harvested.” Market makers then take advantage of this opportunity to continue unloading and exit completely.

6 Ways to Help You Avoid Becoming a “Leek” in the Investment Market

The key to avoiding losses is cultivating rational thinking and mastering the correct timing for buying and selling. Here are practical suggestions:

1. Choose an investment method suitable for yourself

Different investment methods have their characteristics. Stocks are suitable for investors with time and energy but are volatile and risky; funds are suitable for long-term investment with relatively lower risk; forex trading operates 24 hours with high liquidity but frequent fluctuations; CFDs allow two-way trading, profiting from both rises and falls. Choose tools based on your risk tolerance and time commitment.

2. Select legitimate and regulated trading platforms

Platform security directly relates to fund safety. Be sure to choose authorized platforms regulated by local financial authorities to ensure transparent transactions, reasonable costs, and technical security.

3. Develop your own investment methodology

Smart investors are good at learning and summarizing. Before trading, understand how the market works, learn fundamental and technical analysis, and develop independent judgment habits. Remember a key principle: listen to the majority, consider minority opinions, but ultimately make your own decisions.

In trading, you also need a strong mindset to resist market emotional fluctuations. As Warren Buffett said: “Be fearful when others are greedy, be greedy when others are fearful.” In a bear market, be brave to position; in a bull market, stay cautious.

4. Learn to take profits and cut losses

This is the last line of defense. Set reasonable take-profit levels (e.g., exit when gaining 30%) and stop-loss levels (e.g., cut losses when reaching a certain percentage). Protecting your principal is more important than chasing high returns. Many platforms offer automatic stop-loss features—make full use of them.

5. Diversify investments to reduce risk

Avoid putting all your funds into the same asset or asset class. Through portfolio diversification and allocation, reduce the extreme risks associated with a single asset. You can also utilize both long and short positions to find opportunities in different market conditions.

6. Keep up with market information in a timely manner

Markets change rapidly, and missing key information can turn profits into losses. Besides following news and financial media, make full use of platform tools—such as economic calendars, real-time quotes, and technical indicators—to make more accurate judgments based on technical analysis.

Summary

The essence of avoiding becoming a “leek” is to get rid of blind, lucky, and greedy psychology, and to conduct trading with rationality and discipline. Even after experiencing losses, review the issues carefully to avoid repeating mistakes. There are no shortcuts in investing—only through continuous learning, summarizing experiences, and accumulating knowledge can you better protect your capital in the market.