Hello everyone, today we are going to talk about why most retail investors lose money in cryptocurrency trading.

Warren Buffett once said, "The market is a device for transferring money from the impatient to the patient." This statement is especially true in the cryptocurrency market. Many people are attracted by "quick profits" and "financial freedom," but the reality is that most end up losing money.

First is a lack of understanding. Many newcomers jump into trading without grasping technical analysis and market rules. Peter Lynch has warned: "Never invest in something you don't understand." Yet they often blindly trust the "experts" on social media, following hype to buy tokens without even understanding the underlying logic of the projects, so their losses are not surprising.

Emotions also play a big role. In times of fear, they rush to sell at the slightest dip, even panic-selling, missing out on rebounds; in times of greed, they hold out for even higher points after making profits, only to see their gains evaporate and end up in losses. Bernard Baruch said, "In trading, what matters is not how much you make, but how much you don't lose."

Ignoring risk management is even more fatal. Using high leverage amplifies risk, or putting too much money into a single trade, are both reasons for quickly losing everything. The market has long had a golden rule: never risk more than you can afford to lose. No matter how good the strategy, without stop-loss and position control, one can still fall victim to extreme market conditions.

The “herd effect” of blindly following the crowd is also very common. When prices rise, fearing a missed opportunity, they buy in, often at the peak; when the market falls, they are swept up by fear and sell at lows, making the opposite move. Buffett's words are very fitting: "Be fearful when others are greedy, and be greedy when others are fearful."

Overtrading can also lead to poor decision-making. In the 24-hour cryptocurrency trading environment, some people stare at the screen all day and trade frequently, resulting in high fees and decision fatigue, which diminishes their judgment and leads to impulsive mistakes. Sometimes, refraining from trading can actually result in smaller losses.