How you as a trader can lose money in trading cryptocurrencies.


It's been a beaten trading advice for a very long time but it is still the most important and basic things to learn about trading any assets - always do your research and manage your risk.

 

Focusing on cryptocurrencies, trading this kind of assets will always be risky especially when doing leverage trading. Making your own research will also mean building your strategy on how to perform your trade with minimal risks. Like everyone said,

"Plan your trade. Trade your plan" 

Excluding the DYOR and risk management advice, this article is compiled with 3 of the main reasons why traders are tend to lose their trades and lose their money from it.

Trading With Emotions.

Planning your trade and executing your plan is a must and one of the good strategies when trading. However, since the crypto market is very volatile and very unpredictable, our emotions can have an impact on our trades.

No matter how great your T.As (technical analysis) is, and a sudden dump in the chart happens, a high chance could be that you can lose your focus. Your emotions might take over your strategy and feel pressured of losing money just because your T.As didn't work after you saw a huge drop in price of the coin or token you are trading. Traders will feel hopium or take gamble of letting your trades go, or not cutting losses since you are now in huge losses and cutting it will be hard to take back your money.

Always believe in your strategy and set your trades according to your comfort.

 

Not Utilizing Stop Loss or No Stop Loss At All.

The most important thing about using a stop loss is preventing your position/trade or your account from liquidations. Using stop loss can be your safe haven knowing that your trades are at a minimal risk and you can take the small losses when your stop loss is hit.

If you don't put a stop loss in your position, your trade and entire account (if the position was crossed margin) can get vanished in an instant if a sudden nose-diving happens. You should use this method for every trades you are taking or whenever you have a winning trade but still want to have an unrealized profits and see how much you can still get from it, you can use a trailing stop loss - a stop loss set in a winning trades with, or stop loss in a profit.

 

Jumping In A Trade Because Of FOMO.

This is not really a bad strategy if you are FOMOing into a trade that is fundamentally and technically strong. But this act is not recommended to newbie traders.

There's a chance that jumping into this kind of trade can get you a little profit especially if the hype is real around it, but the chance of getting wrecked is more likely.

People are tend to being afraid of losing a possible gain that's why they do a reckless move and taking the risk of fear of missing out.

Personally, I started in trading doing this FOMO trading. And I can personally say that this is a very risky play especially when you don't really know what you are doing and what you are getting into. Fomo trading is only good for a very short time, holding it for a very long time is not ideal and very much likely tend to lose that trade as people will slowly make the chart go back down after a good fundamentals, or even in technicals.

 

Conclusion.

No matter how great your technical analysis is and how you are confident with your strategy, the market will always prove to you that no strategy is perfect because it is very unpredictable. You can only use risk management in order to minimize the risk of losing money in your trades.

Lead Image: Pixabay.

This is an article from my new account in read.cash. 

 

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Mr. Valentine ❣️
Mr. Valentine ❣️

I'm a writer and a learner.


Informative crypto-related topics
Informative crypto-related topics

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