Here is a breakdown of the reasons why some people lose money.
What are the ways to avoid loss and achieve gains?
$AGLD
Losses in cryptocurrency trading on Binance are common due to the volatile nature of this market and other factors related to Binance itself or the way beginners trade.
First: Reasons related to the digital currency market
1. High market volatility
Cryptocurrencies are known for their highly volatile prices, which can lead to sharp movements in a short time.
Beginners often cannot tolerate these fluctuations, which leads to wrong decisions such as selling at a loss.
2. Lack of clear organization
The cryptocurrency market is completely unregulated, which exposes traders to fraud or market manipulation.
Significant declines may occur due to negative news or regulatory decisions.
3. The impact of news and rumors
Rumors about coins or projects can drive prices up exaggeratedly (FOMO), then suddenly drop, causing beginners to lose money.
Breaking news such as government decisions on cryptocurrencies greatly impacts the market.
---
Second: Reasons related to the Binance platform
1. Use of high leverage (Futures Trading)
Binance offers the ability to trade futures with up to 125x leverage, which means that a small loss in the market can consume your entire capital.
Beginners are lured by the potential for big profits, without understanding the risks of leverage.
2. Diversity and complexity of tools
Binance offers complex trading tools such as margin trading and options trading, which require deep understanding, and beginners often use them randomly.
Trading Altcoins/Stablecoins without studying leads to losses due to unexpected fluctuations.
3. Hidden fees and charges
Maker/Taker Fees and withdrawal commissions sometimes surprise beginners and affect profits, especially when trading small volumes.
4. Not understanding automated trading platforms
Binance offers automated trading tools like Bots or Staking, which may not be clear to beginners, leading to misuse and loss of funds.
---
Third: Reasons related to beginners themselves
1. Lack of knowledge and experience
Not understanding technical and fundamental analysis leads to ill-informed trading decisions.
Ignoring platform instructions and guides, such as how to set a Stop Loss.
2. Overtrading
The desire to recoup losses pushes beginners to open more trades recklessly, increasing losses.
3. Dependence on others
Beginners often rely on recommendations from social media sites or Telegram groups, which may be unreliable or aimed at manipulating the market.
4. Greed and Fear (FOMO/FUD)
FOMO: Fear of missing out causes beginners to enter late trades after prices rise, and they suffer losses when corrections occur.
FUD: Fear of negative news drives them to sell assets at a loss.
5. Lack of a clear trading plan
Trading without a plan or strategy makes beginners' decisions random and disorganized.
---
How to avoid loss on Binance?
1. Learn the basics of trading
Invest time to understand technical and fundamental analysis and learn the platform tools.
Binance offers an educational academy (Binance Academy) that beginners can benefit from.
2. Risk management
Do not risk more than 1-2% of your capital on a single trade.
Use Stop Loss orders to limit losses.
3. Start with small amounts.
Try trading with small amounts or using a demo account to learn without risking capital.
4. Beware of leverage
If you are a beginner, avoid using leverage until you gain enough experience in the market.
5. Don't trust rumors.
Analyze the information carefully, and do not rely on unreliable recommendations.
6. Trading on major pairs
Start by trading more stable pairs, such as BTC/USDT or ETH/USDT, before trying out altcoins.
7. Continuously evaluate performance.
Review your performance and learn from your mistakes to improve your future strategy.
8. Using Security Features on Binance
Enable two-factor authentication (2FA) and make sure your account is secured to avoid fraud or hacking.
---
Conclusion
Beginners’ losses on Binance are due to several factors, including lack of knowledge, market volatility, using complex tools without understanding them, and greed. To avoid losses, you should focus on gradual learning, applying risk management, and avoiding emotional or random trading decisions.