Zhu Su Analysis: Why Selling at Market Peaks Is Actually More Risky

Zhu Su’s opinion on selling at market peaks reveals a psychological dimension often overlooked by traders. According to the founder of Three Arrows Capital, exiting a position during a rally is not a guarantee of financial security—in fact, it can trigger more problems than selling during a market downturn.

Zhu Su explains that successfully closing a position at the highest point creates a dangerous psychological effect. The surge of confidence after achieving significant gains often leads traders to make impulsive decisions. This euphoria is not just a positive emotion—it is a mental trap that turns business logic into gambling.

Euphoria from profits and the trap of overconfidence

After successfully selling at the market peak, many traders fall into the illusion that they have mastered the formula for success. According to a report from NS3.AI citing Zhu Su’s analysis, this condition encourages them to re-enter the market immediately without careful consideration. Instead of protecting profits, they increase risk exposure with hasty entry decisions.

This overconfidence clouds traders’ risk assessment. They tend to ignore stop-loss orders, increase lot sizes, or open positions in unfamiliar instruments. As a result, the gains just made are quickly eroded, and can even turn into significant losses.

Case Study: When Victory Becomes the Seed of Defeat

Zhu Su cites Garrett as an example, who achieved substantial profit during the 10/10 event. After successfully selling at the highest level, Garrett fell into a trap of misplaced overconfidence. Instead of learning from luck or reflecting on strategy, he engaged in even more aggressive and speculative trades.

This case illustrates a common pattern in trading: one success does not automatically guarantee the next. In fact, early success often becomes the seed of fatal mistakes because it shifts the trader’s perspective from prudent risk management to overconfidence trading.

Valuable lessons for market participants

Zhu Su’s message is highly relevant for modern traders: selling at the peak is a technical skill, but mental discipline is an art. Successfully closing a profitable position should be followed by a cooling-off period—time to calm down and evaluate, not immediately opening new positions.

Traders need to build systems that protect them from overconfidence. This includes setting realistic profit targets, applying strict position sizing, and most importantly, recognizing that one win does not mean understanding everything about the market. By listening to warnings from experienced practitioners like Zhu Su, traders can avoid psychological traps that have already ensnared thousands of market players before.