I have made money and lost money in trading over the years. Let me first talk about the main reasons for the losses. I have also fallen into some of the traps myself.
1. Leverage is a double-edged sword
Leverage can make you run faster than others, but it can also make you die faster than others. I felt very excited when I first started playing with leverage, but after a while I realized that spot trading is actually simpler. Many novices dream of getting rich overnight through a single transaction, from 10,000 to 1 million. However, after a 50% loss, you have to double your money to get your money back. After making a few profits in futures trading, you become self-inflated and think you are gifted. As a result, you end up with a heavy position and a full position, and end up back to square one. A true trader will never put himself in a desperate situation. From the moment you are fully invested, you are doomed to lose. I hope everyone will be vigilant enough in leverage trading.
2. Why do retail investors easily lose money?
Many people don't know how to choose coins, but they don't know how to operate. They either trade frequently or enter the market with full positions, and they don't understand the general trend. They watch the market all day long, panic when they see a decline, and can't help but operate, and as a result, they miss the big market. Sometimes, even though they know it is a downward trend, they still hold on, and short-term operations become long-term holdings, and the more they lose, the more they lose. The correct approach is to choose coins with good fundamentals and strong growth, and hold on to them when the overall trend is upward. Remember one sentence: opportunities come from falling, and risks come from rising. Most retail investors like to chase rising prices and are afraid of falling. They get anxious when the coin doesn't rise, and they can't help but chase when they see it rising quickly, and end up standing guard at a high position. They can't stand the adjustment of the coin in their hands, and they don't look at the general trend, and as a result, they miss the real strong coins. In fact, falling is an opportunity, especially a shrinking callback in an upward trend, which is a golden pit.
3. Set up take profit and stop loss
Cryptocurrency trading is a game of probability, with wins and losses. Most people are unwilling to stop losses, and the result is that the more they spend, the worse it gets. When the price of the currency is not as expected, or falls below the trend line, you must stop losses decisively, and don't fantasize about a rebound. Similarly, if the profit is already good, it is a good decision to leave the market at any time. Don't think about waiting until the highest point to run, it is good to be able to withdraw at a relatively high point. Most people cannot sell at the highest point, so there is no need to worry about this.
4. Look for strong coins in a weak market
When the market falls sharply, coins that rise against the trend or only fall slightly often have strong main players in them. Such coins usually have room for future growth and are worth holding for the long term.
5. Differences between inside and outside the industry
In any industry, experts make money from laymen. If you don’t understand the trend, don’t understand the operation strategy, don’t have a systematic investment method, and are unwilling to learn from experienced people, the result is predictable.
Cryptocurrency trading is not easy, but only by mastering the method and abiding by the discipline can you go further.