In your case you lose money if you buy bitcoin, and you gain money when you sell bitcoin. Yes: The monetary equivalent value of your assets/wealth decreases if your assets lose value, and increases if your assets gain value. If you own $1'' in Bitcoin and Bitcoins lose half their value, you now hold $' in bitcoin. May 28, · Cryptocurrencies are a form of digital money that use encryption to secure transactions and control the creation of new units. As Bitcoins rise in value, so do the prospective profits of those. People easily lose money may it be in the crypto trading scene or not, the challenge is how people manage it in general. Crypto trading is one of the best “money making” methods today if done right. In order to avoid failure, we have provided you guys with 5 reasons to look out for and why people are losing money by trading crypto in general.
Can you lose money on bitcoin traderCan you lose money by trading BTC? Traders' Secrets - Traders-Paradise
Simply because the longest bear run we have experienced is two years. Those who invested in Bitcoin in December '13 and didn't panic sell during the crash had to wait until early '17 to be back in profit. Over three years. A bear market can hit us at any point and if it does then the longest we have experienced is two years and this is our benchmark.
Crypto is not a get rich quick scheme, you might get lucky and hit a bull run, but there is no guarantee. If you treat Crypto as a get rich quick scheme you will likely make poor unplanned decisions, lose money and chase. Most Crypto traders have considered day trading; many have tried, some with success and some with failure. I have tried and failed and have written before about why I don't day trade Crypto. Firstly I am going to deal with lifestyle.
I expect that most people who are reading this already have a job, therefore if you are going to day trade Crypto, then you are either going to do this while at work, hiding in the toilets or under your desk or you are going to be doing this in the evenings and on the weekends. If you are doing this at work you are neglecting your job and ripping off your boss as you can't just dip in and out, it will be massively distracting.
I did the same day trading tech stocks a few years back when I lost a fuck load of money. What will happen is your career will suffer, and your trading will likely be poor as you can't effectively do both. If you are doing it in the evenings and weekends, then you are potentially neglecting your family or neglecting your health and life. Day trading is super fucking hard; you have to be glued to the markets and news, following trends and using technical analysis to make scalps.
Even then, a quick change in the market can stop you out on all your investments. If you think you are smart and you can quit your job to do this, then you are taking a huge gamble if you do not have serious reserves.
Even if you are lucky enough to have made enough money and do not to need to work you are still entering a super hard market to day trade. I know of a trader this week who was stopped out of all of his investments because of the China news, where if he wasn't a day trader and held long positions on them all a bunch would have been close to recovery.
Each stop was executed at a loss. As such, all those losses need winning back. The problem with day trading is that markets can operate irrationally in the short-term, things happen which makes no fucking sense at all and you are battling the human emotions of fear and greed.
The chart below perfectly demonstrates the experience the most day traders will go through at some point. We don't ever really know what the market is going to do in the short-term, so the emotions of fear and greed will cause us to buy and sell at exactly the wrong times. You don't need to day trade Crypto. You don't need to give yourself the stress of finding coin scalps or the stress of huge losses when the market turns.
While the market is highly volatile it also acts in predictable patterns. As I keep saying, investing in Crypto is speculative, what we are speculating is that the digital currencies will become forms of payment and the service based tokens will support systems and technology which will revolutionise markets. If the speculation proves right then the investments will go up.
As such, you don't need to day trade. You need to find technologies you believe in, find a good investment point and then hold your positions through the upwards waves. I have argued with traders on Reddit over this.
Margin trading is whereby you are borrowing to invest because you are using leverage. Margin trading breaks the golden rule of not investing more than you can't afford to lose, because if you could afford to lose this, then you would just make the initial 10x investment yourself. With margin trading, you are being greedy and borrowing to invest, and you, therefore, run the risk of a margin call. Margin calls suck ass big time. From Investopedia :. A margin call is a broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.
Margin calls occur when the account value depresses to a value calculated by the broker's particular formula. An investor receives a margin call from a broker if one or more of the securities he had bought with borrowed money decreases in value past a certain point. The investor must either deposit more money in the account or sell off some of his assets. Also, read their article about The Dreaded Margin Call. If you can't cover your losses, your trade is closed, and you lose your initial investment.
We already know that Crypto investment is highly volatile and super risky. If you are margin trading, you are therefore putting your money at risk. If you are then given a margin call and can't add funds, then you lose your original investment if the price drops below a certain point. If you don't margin trade and just trade your asset as you own it, which is a 1x return, then whatever the market does you still own your asset.
Margin trading is only for the very experienced traders, and even then it is high risk. As someone who has experienced a margin call and lost a significant amount of money, I won't ever do it again. Shorting is where you are betting on an asset to drop in value and is a useful tool within markets to measure sentiment.
The main issue with shorting Crypto is that you are shorting a highly volatile market which is on a two-year bull run. You are trading against the market sentiment. The other issue with shorting in a bull market it takes you back to being a day trader as you have to track prices closely. And I don't recommend day trading.
Similar to margin trading you don't own the asset, and the scariest thing is, identified above, there is theoretically no ceiling on the growth in the price of an asset. An asset can double, triple, 10x in price and as it moves up, you are losing money.
Short selling is only for the very experienced. It is a place for the inexperienced to lose money. This last one is a factor which investors in the stock market do not have to worry about but should be your primary concern when getting into Crypto. The things which make Crypto easy to trade and spend also make it easy to steal. There are hackers all over the world trying to hack personal computers and exchanges to steal your Crypto.
I have written before about how I expect to get hacked one day and the things I am doing to protect myself. You need to take security very seriously; one slip up can lose you either a bunch or all of your assets. You only need to search Reddit to find horror stories of people who didn't set up a two-factor authentication on an exchange, who clicked on a link in a spam email or who went to a phishing website and gave over their details. Hackers want to target you; they want to steal your Crypto.
Be hot on your security and also make sure you buy a hardware wallet like Ledger Wallet or a Trezor. Limbo is not a good place! Leverage can be devastating if not used properly. It is when a trader uses borrowed money to increase trading position beyond what such could from existing cash balance on the trading account. The broker allows leverage through margin trading and borrows missing funds. The most popular adage in the trading world refers to a making margin trading or the use of leverage to go beyond the line of trading more than you can afford.
Since you are already in debt the minute you took the leverage. And now you have the right reason to invest some time in learning. All you need is to read and to make a decision or you will face all ways of successfully losing money in trading Bitcoin and crypto.
Save my name, email, and website in this browser for the next time I comment. Lose money in crypto trading is not an easy task. Never trade Bitcoin or any other crypto without a strategy. When unsure what's the right move, you can always trade Forex Get the number 1 winning technical analysis strategy for trading Forex to your email. Containing the full system rules and unique cash-making strategies.
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