Is your trading capital a determinant as to whether your trades will be winners? Absolutely not. I always hear people say I don’t make money or I don’t win trades because my capital is too small. The fact is trading capital is not the reason why your trades are losers, you are your biggest problem. It is worthy of note that all trading decisions are entirely based on knowledge accumulated whether negative or positive, so however, your trading outcomes are from your knowledge. If the knowledge you have makes you lose money in the market, then acquire a new one.
While in forex trading you can make money with either an uptrend or downtrend, in Bitcoin trading you only make money when you buy low and sell high. The truth about trading Bitcoin is that, the higher your trading capital, the higher your risk which means you are prone to losing higher amount if you happen to take a wrong trade.
Why do we lose money while trading bitcoins?
There are a lot of factors that contribute to our losing trades below are some.
- Lack of patience
- Knowledge: The knowledge you have acquired has a great effect on your overall performance in trading if it works then it is positive. However, you have to remember that you cannot have 100 percent winning trades which implies that there is no perfect system. Just consuming anything you see online is not the best way to acquire trading knowledge it will only confuse you. How do you get this knowledge?
On the internet, there are experienced traders who have track records of success; you can research them and read up their materials. For example, Nial Fuller is a great forex trading teacher and a successful trader. You can go to his site and get educated with the right knowledge. Other examples are Mark Douglas etc.
NOTE: The knowledge you acquire from others is just a boost to get you started. So, it will be very good if you develop your own strategy from experience as well.
- Greed: Greed kills very fast in crypto trading. How does greed affect your trading? Assuming you place a trade with a certain amount and it eventually enters the profit side, ideally what you should do is close the trade and take the profit, but greed will tell you to hold on the profit will increase then eventually it crosses to the negative side. This phenomenon triggers what we call emotional trading which results in more errors and consequently loss of capital. There are three types of market seasons, the bear season, the bull season and the consolidation season. The bear season is prevalent when the overall market condition is a downtrend, the market making lower highs. While the bull season is when the overall market condition is an uptrend, the market making higher lows. Consolidation season when the market is moving sideways. Greed affects us more in bear seasons.
- Lack of patience: Patience is a very important virtue of having as a trader, without it, trading mistakes are inevitable. “Don’t chase the market, wait for it to get to you” this statement is always true. Most traders who chase the market ends up wiping there trading account. In trading cryptocurrency or any form of trading, you need to have a working strategy, “a winning strategy” which you are disciplined enough to abide by. Only trade when your edge or setups are in place. Trade like a sniper, place trades only when your target is visible, consequently, before placing a trade make sure you have a predetermined/planned exit, if you don’t have a planned exit, you might get stuck.
Acquire knowledge, tame your greed, be patient and you will be fine. For any question, use the comment section. And remember to share.