How can retail investors who got cut fight back? An in-depth analysis of the "harvesting" phenomenon and a self-help guide

In the investment market, the term “cutting leeks” is frequently heard. Every time the market fluctuates, countless retail investors become the targets of “harvesting.” But what exactly does this metaphor refer to? Why are retail investors always so easily “cut”? The key is, how can we break this curse? This article will analyze this phenomenon layer by layer to help you stay clear-headed in stock, fund, forex, and other investments.

The Essence of Cutting Leeks: Wealth Transfer Among Market Participants

Cutting leeks originated in China’s financial circles, vividly depicting a harsh reality in the investment market: retail investors’ losses are like being repeatedly cut and harvested like leeks, continuously.

Leeks are used as a metaphor for retail investors because of their unique growth characteristics—resilient vitality, quickly sprouting new shoots after being cut. Similarly, in the investment market, after a batch of retail investors are “cut,” new investors keep pouring in, cycle after cycle.

Essentially, cutting leeks is when large capital (often called “market makers” or “whales”) with information, capital, and experience advantages manipulate prices, create false signals, and induce retail investors to buy or sell at wrong times, thereby transferring wealth from retail investors to institutions.

Why Are Retail Investors Easily “Cut”? Four Fatal Weaknesses

Following the crowd, losing independent judgment

The most common mistake among retail investors is buying what others buy. When a hot stock appears, they rush in; when a trending topic in the crypto circle heats up, they blindly go all-in on a project. Behind this herd behavior is unfamiliarity with the market and lack of confidence in their own judgment.

In contrast, institutional investors conduct detailed fundamental analysis before entering—studying company finances, industry prospects, competitive landscape, etc. Retail investors often don’t understand these and have already placed orders.

Insufficient knowledge reserves, easy to be led

The investment market has its own set of rules. Technical analysis, fundamental research, tracking capital flows—all require learning. Retail investors lacking these skills often cannot make rational judgments amid market volatility and are easily swayed by so-called “stock commentaries” or “big V” opinions.

This is precisely the opportunity for market makers—by creating media hype and guiding public opinion, they influence retail investors to make wrong decisions driven by emotions.

Greed and fear alternate, unable to take profits or cut losses

This is the most critical step in the “cutting leeks” process. When making money, retail investors want more profits but are reluctant to take profits; when losing money, they are unwilling to admit defeat, fantasizing about a “V-shaped rebound,” missing the best timing to cut losses, and ultimately getting caught deep.

Data shows that retail investors’ average losses are often much larger than those of institutions, precisely because of these psychological swings of greed and fear.

Buying high and selling low, stepping on the peaks and valleys

When stock prices are high and market sentiment is at its peak, retail investors are most excited, which is when market makers quietly offload their holdings. By the time retail investors realize, prices have already plummeted. Conversely, at the lowest prices and greatest opportunities, retail investors are scared and sell. This “reverse operation” often results in disastrous losses.

The Market Maker’s “Cutting Leeks” Process: A Carefully Designed Hunt

Understanding the market maker’s operation process helps us identify risks. This process usually occurs at the late stage of a bull market and the early stage of a bear market in less mature markets:

Mid-bull phase: Market makers and retail investors enjoy the gains of rising prices together, but as the bull market enters its later stage, market makers, with their information advantage, sense the risk early and begin to quietly exit. Meanwhile, new retail investors keep entering, unaware that they are already holding the bag.

Early bear phase: During the decline, there may be a brief rebound, giving retail investors the illusion of a market bottom, attracting them to add positions. Previous holders, doubting the downward trend, choose to hold on. Thus, market makers use these rebounds to continue unloading, while retail investors sink deeper.

This process is akin to a psychological experiment, exploiting retail investors’ greed, fear, and herd mentality.

How to Avoid Being “Cut”? Six Essential Lessons

1. Understand different investment methods and choose what suits you

Diversifying investment methods involves varying risk and return profiles. Different approaches suit different investors:

• Stocks: Higher risk, volatility, but highly operable. Suitable for those with time and energy to track the market.
• Funds: Managed by professional managers, relatively diversified risk, suitable for long-term investment.
• Forex: 24-hour trading, high liquidity, but frequent volatility, requiring higher professional knowledge.
• CFD (Contracts for Difference): Can trade both ways, low initial investment, high leverage, but also high risk—use cautiously.

The key is not to blindly follow trends but to decide based on your risk tolerance and available time and energy.

2. Choose legitimate and compliant trading platforms

This is the first line of defense in investing. When selecting platforms, verify:

• Whether they are authorized and regulated by local financial authorities
• Their fund security measures (such as segregated accounts, negative balance protection)
• Transparency and reasonableness of trading costs
• Promptness of customer support

A compliant platform can help you avoid many unnecessary risks, such as fund misappropriation or market manipulation.

3. Build your own investment methodology and cultivate a strong mindset

The most common mistake among novice investors is jumping in without their own operational logic. Smart investors:

• Study systematically: Learn technical analysis, fundamental research, risk management, etc.
• Summarize experience: Review each trade to understand why you gained or lost.
• Establish principles: For example, “Listen to the majority, consider minority opinions, but make your own decisions.”

Maintaining rationality in trading is crucial. The market is always uncertain; no one can predict short-term movements accurately. Learn to stay calm when making profits and avoid panic when losing—this is the mindset of winners.

Warren Buffett said well: “Be fearful when others are greedy, be greedy when others are fearful.” This is not just empty talk but the deepest wisdom in the market.

4. Learn to set take profits and stop losses; protecting capital is the top priority

This is the most practical skill to avoid being “cut.” Develop habits such as:

• Set take-profit levels: For example, aim for a 30% return. Once achieved, exit decisively and lock in gains. Greed often turns small profits into big losses.
• Set stop-loss levels: For example, a -10% stop-loss point. Once losses reach this level, cut losses promptly. Most trading platforms offer automatic stop-loss functions—use them wisely.

Preserving capital is paramount. Losing 50% requires a 100% gain to break even—that’s the cruel math.

5. Diversify investments; don’t put all eggs in one basket

This classic wisdom reduces risk by spreading investments:

• Lower the fatal risk of failure from any single investment
• Find profit opportunities across different markets
• When markets decline, hedge by shorting or holding defensive assets

For example, allocate between stocks and funds, hold longs in rising markets, and short in falling markets—both sides can profit.

6. Obtain timely market information and adjust strategies dynamically

Markets change rapidly; missing a major news event can turn profits into losses. Retail investors should:

• Follow technical analysis: Understand candlestick charts, support/resistance levels, etc., to identify entry and exit points.
• Follow fundamentals: Major policies, company earnings, industry trends—all influence prices.
• Learn to use tools: Financial calendars, real-time quotes, market sentiment indices, etc.

Many trading platforms have these tools built-in; make full use of them. Compared to sifting through endless news, these curated core information sources are much more efficient.

Final Advice

The existence of “cutting leeks” reflects information asymmetry and psychological warfare in the market. But this doesn’t mean retail investors are doomed to lose money; rather, retail investors need to put in more effort to arm themselves.

By mastering these six points, novice investors can largely avoid being “cut.” But to become truly skilled, continuous experience and knowledge accumulation are necessary.

If you have already experienced the pain of being “cut,” the most important thing is to adjust your mindset. Don’t rush to recover losses; instead, review that failure—why did you lose? Did you choose the wrong direction? Did you fail to manage risks? Was it greed or fear? Only by understanding these can you avoid repeating the same mistakes next time.

The investment market is like a marathon; the winner is not the fastest runner but the most steady.