Why Do I Fail In Crypto Trading? A million dollar question by many. What is the reason behind this? There are many successor in crypto trading. Yet the ratio of people who profits is less than people who loss. Do most traders fail or lose money? The answer is NO.
Crypto trading seems to be the easiest platform to earn money. With such thoughts many start investing and trading in crypto. But there is always a catch. No money comes of easy path. It requires dedication, consistency, hard work and smart work. So what is the difference between a successful trader and a trader who fail in crypto trading? Here is the answer for all your questions.
Why do Most Trader Lose Money
There are many reasons behind losing money in crypto trading. A statistic suggest there is 95% for a trader to fail in crypto trading. This means out of 10 traders only 1 trader will have the chance of getting successful at crypto trading. Here are few reasons who do people lose in crypto trading and how can you avoid those mistakes.
Reasons you Fail in Crypto Trading
You are Not Pre Planned
Most new traders begin their careers without a trading strategy. A well-thought-out trading strategy is crucial for success since it will help you maintain discipline and concentration under pressure.
Your trading plan should include a description of your investment objectives, risk management plan, entry and exit points, and any other rules or regulations you wish to adhere to. Inexperienced traders emotions will take over without a clear trading strategy, leading to rash actions.
You are Using Excessive Leverage
Over-leveraging is yet another error that unsuccessful traders frequently make. When you use leverage, you borrow money from a broker to increase the market exposure of your position. Leverage can be an effective instrument for helping to generate significant profits from modest investments, but when used carelessly, it can also result in catastrophic losses.
Let’s imagine you have $1,000 in your trading account and decide to purchase $10,000 worth of Bitcoin using 10x leverage. You’ve just earned a 100% return on your investment if the price of Bitcoin increases by 10%. However, if the price of Bitcoin drops by 10%, your entire investment is destroyed.
As you can see, leverage has two sides and should only be used sparingly. Leverage your trading of crypto contracts up to 100 times.
You are Not Maintaining Risk Management
The most crucial element of trading, in my opinion, is risk control. While it can’t assist you directly make or lose money, it can help you manage how much you might make or lose on a trade by tamping down prospective gains and preventing runaway losses. Unfortunately, failing traders tend to disregard it more often than not.
You can employ a variety of risk management techniques, but one of the most crucial is placing stop loss orders. These are orders that can be set to activate when an asset’s market price reaches a specific level.
Although there are no assurances that your order will be completed at the price you specify, it can help you execute your current trading plan and exit a losing one.
Never risk more than 2 percent of your account balance on a single deal is another piece of advice frequently provided to novice traders. Even though this might seem like a modest sum and more seasoned traders would surely break this rule by using leverage or larger deals, adhering to this rule (or a variation of it) can prevent you from losing your entire account when a trade goes against you.
FUD and FOMO
Even the most disciplined traders are susceptible to the overwhelming emotion of FOMO, which can lead them to act impulsively. When you observe the value of a cryptocurrency increasing quickly, FOMO frequently begins to set in. You feel pressured to invest right away before you lose out because it appears that everyone else in your vicinity is making money off of this.
However, since markets nearly always fall after a strong gain, and the hoopla becomes priced in, these kinds of investments typically wind up being losing trades.
FUD, on the other hand, causes investors to panic-sell into losses during a bear market, frequently as a result of the bad emotion that is being propagated by those around them.
Having a clearly defined trading strategy with specified entry and exit points is the best defense against FOMO and FUD. This will enable you to maintain discipline and only accept trades that satisfy your requirements.
You don’t have Proper Knowledge
Many novice traders profited in the 2017 cryptocurrency market but did not sell their holdings during the drop. You should be aware of how markets operate and credit skill rather than chance for your gains and losses. You must also learn how to trade consistently over an extended period of time. Finally, you must keep a close eye on the markets and keep in mind that your successes and failures are directly related to your experience and learning curve.
You don’t have Education about Crypto
Your trading performance may suffer if you lack knowledge. Lack of investigation, however, is not a defence. You should continuously study, investigate, and keep up of news and developments in the sector. You won’t be able to make sensible selections otherwise. Follow current affairs and stay up to date with new technologies.
Some people believe they are knowledgeable enough about cryptocurrency. This is a serious error that could cost you money. They don’t stay current with emerging news, fashions, and innovations. They are out of touch with the market and lack market knowledge.
You are Not using Technical Analysis
You don’t know what’s going on with the cryptocurrency market. You worry that you lack trading skills. Never have you done that. You lack the necessary knowledge. Your lack of understanding of technical analysis is a serious issue in the cryptocurrency market.
You are Trading with Emotion
You have an emotional connection to the project. You’re keeping your position when the price moves in the opposite direction by 80%. You don’t regard the market. You’re merely denying your feelings. Additionally, you don’t follow the market. The coin’s creator is unimportant to you. Up until the point when the market tells you otherwise, your viewpoint is worthless.
Strategies a Successful Trader follows
As said before there are only 1% of trader be successful in crypto trading. So there rise a question too many how is that possible. What that 1% traders do? How can I become a successful trader? Here are few crypto trading strategies used by successful traders.
Five Identifiers of a Successful Day Trader
A Logical Frame of Mind
The mindset of successful and unsuccessful traders differs the most. While unsuccessful traders frequently allow their emotions to get in the way of their trading, winning traders have a positive and disciplined perspective.
Develop a positive and disciplined mindset if you want to become a great trader. This entails having a precise and thorough trading strategy, adhering to your risk-management plan, and remaining composed and unbiased when making trading decisions.
Choosing Strategy over Tactics
Their capacity to adhere to a strategy is one of the key distinctions between profitable and unsuccessful traders. Winning traders have a clear trading plan from which they never stray, but they also possess the ability to change their techniques in order to retain their larger strategic objectives.
A successful trading strategy should be straightforward, simple to implement, and built upon reliable market and risk management fundamentals. You’ll improve your chances of long-term success by adhering to a straightforward and successful trading plan.
Always have a Cautious Approach
Additionally, successful traders always have a specific and well-defined risk management approach. This could entail placing a stop-loss order to limit their losses in the event that a trade goes against them or simply putting 1% of their account balance at risk per trade.
The importance of risk management in trading cannot be overstated. When you have a solid risk management plan in place, you can secure your money and keep making money even when the markets aren’t on your side.
Never Stops Learning
There is always more to learn, and the only way to learn from others is to publicly share your thoughts and solicit advice from those with more expertise. When I first began out, I had a lot of supportive mentors. They provided me with crucial advice, without which I would not currently be a full-time trader.
In conclusion, Crypto trading is easy way of making money. But you must totally be aware of this platform. Before enter into trading do your research, educate yourself, get proper guidance, be dedicated and discipline in your crypto journey.
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