Active traders make profits or losses based on market movements and their trading strategies. Here’s how it works:
How Active Traders Profit:
Buying Low, Selling High (Long Trades)
Traders buy BTC or other assets at a lower price and sell when the price rises.
Example: Buying BTC at $90,000 and selling at $95,000 earns a $5,000 profit.
Short Selling (Betting on Price Drops)
Traders borrow BTC and sell it at a high price, then buy it back at a lower price to return it.
Example: Selling BTC at $95,000, then rebuying at $90,000 gains a $5,000 profit.
Scalping (Small, Frequent Trades)
Traders make multiple quick trades, capturing small price changes.
Example: Buying BTC at $95,200 and selling at $95,300 repeatedly.
Arbitrage (Profiting from Price Differences)
Traders buy BTC on one exchange at a lower price and sell on another at a higher price.
Using Leverage
Margin trading lets traders control larger positions with small capital.
Example: 10x leverage on a $1,000 trade controls $10,000 worth of BTC, magnifying gains.
How Active Traders Lose Money:
Wrong Market Predictions
If BTC moves opposite to a trader’s expectation, they take a loss.
Example: Buying at $95,000 expecting a rise, but BTC drops to $90,000.
Liquidation in Leverage Trading
If BTC drops too much in a leveraged trade, the trader’s position gets liquidated (forced exit).
High Trading Fees
Frequent trading increases costs, reducing profits.
Slippage & Volatility Risks
Sudden price changes can cause traders to buy or sell at worse prices than expected.
Emotional Trading & Overtrading
Fear and greed lead to poor decisions, like panic selling or chasing trades.
