The term "cutting chives" refers to profiting from inexperienced investors in financial markets. But what exactly does "chives" signify in the context of stocks and cryptocurrencies? Why has a vegetable name evolved into a somewhat mocking, negative term? This article explores the origin of "cutting chives," its underlying implications, and behaviors that make investors vulnerable to exploitation.
What Does "Cutting Chives" Mean?
The term "chives" originated in China's financial circles.
Chives are resilient plants—even when cut, they regrow quickly if their roots remain intact. Similarly, in markets, "whales" (large investors) see retail investors as perpetual "chives" because new散户 (retail investors) continuously enter the market.
These散户 buy aggressively during rising markets, fueling further growth—like chives sprouting upward. Once prices peak, whales sell en masse, causing a crash.散户 then suffer losses,被迫认赔出场. This cycle is called "cutting chives."
In markets, profits come from others' losses.
Interestingly, new散户 soon arrive, restarting the cycle: growth →收割 (harvesting) → new growth. This endless loop repeats in crypto, stocks, and other markets.
The Step-by-Step Process of "Cutting Chives"
Markets typically comprise two groups: institutional investors and retail investors.
Institutional Investors' Role (The Harvesters)
Institutions, hedge funds, and whales manipulate markets by:
- Releasing bullish news to inflate prices.
- Luring散户 to buy in during the rally.
- Dumping shares at peak prices, triggering a crash.
- Repurchasing at lows to repeat the cycle.
Result: Whales profit;散户 lose heavily.
Retail Investors' Role (The Chives)
散户 often:
- FOMO Buy: Chase rising prices, buying high.
- Panic Sell: Hold losing positions until capitulating at lows.
- Repeat: Re-enter at the next peak, perpetuating the cycle.
3 Traits of Investment "Chives"
Typical韭菜 exhibit:
- Buy High, Sell Low: Enter at market tops; exit at bottoms.
- Armchair Analysts: Theorize well but fail in实战 (real trading).
- Herd Mentality: Blindly follow trends without research.
Source: Adapted from 股市「韭菜」的三大特徵! (Chinese article).
How to Avoid Being "Cut": Cultivate Critical Thinking
韭菜's core flaw is following crowds mindlessly. To avoid this:
Question "Expert" Advice:
- If a "guru" predicts Litecoin's rise, ask: What’s their rationale? What data supports this?
- Verify claims like "Yield curve inversion signals recession."
Research Independently:
- Cross-check news with data (e.g., economic reports, geopolitical events).
Develop Your Thesis:
- Form opinions based on evidence—not hype.
👉 Learn how to analyze market trends like a pro
FAQ Section
❓ Why do散户 keep falling for this cycle?
Human psychology (greed/fear) and lack of financial literacy perpetuate it.
❓ Can technical analysis help avoid being韭菜?
Yes—tools like RSI or MACD can identify overbought/oversold conditions, but combine them with fundamental analysis.
❓ Are all crypto influencers untrustworthy?
Not all, but many profit from affiliate links or pump-and-dump schemes. Always verify their track record.
❓ How do whales manipulate prices?
Via tactics like spoofing (fake orders) or wash trading (self-dealing to fake volume).
👉 Discover advanced trading strategies
Recommended Reading
- Dollar-Cost Averaging: A strategy for steady investors.
- The Compound Effect: How small gains snowball.
- Avoiding Debt Traps: Credit card interest pitfalls.
Key Takeaways:
- Markets reward the informed.
- Avoid herd behavior—think critically.
- Continuous learning reduces vulnerability.
By mastering these principles, you’ll no longer be fresh chives—you’ll be the gardener.