Losses are a family business in cryptocurrency trading and could happen to any investor. Find out why most Bitcoin traders lose money
Bitcoin is an independent asset class traded on major stock markets around the world. In recent years it has outperformed all other asset classes, becoming the most profitable asset on the market today. However, cryptocurrency exchanges boast the most significant daily Bitcoin trading volumes. While BitQH trading has continuously attracted many companies and individuals, it is a murky frontier with several risks.
A past study has established that around 95% of Bitcoin traders lose money and the numbers may even be higher for various reasons. So why are Bitcoin traders losing money? The following article explores the main reasons that would impact Bitcoin trading losses.
Lack of a precise trading strategy
Like other open markets, the cryptocurrency market undergoes constant changes that require unique trading strategies. Experts advise beginners to understand the different Bitcoin trading strategies and how to apply them based on market environments. This would allow traders to avoid losses and generate income even in apparently unpleasant conditions. There are various approaches to trading Bitcoin, including day trading, range trading, scalping, and dollar cost averaging.
Day trading involves taking positions and exiting them on the same day. Essentially, day traders take advantage of price differences across various cryptocurrency exchanges to generate minimal regular returns. It requires technical analysis to determine the ideal entry and exit points for certain cryptocurrencies.
Range traders are buying and exiting positions based on expert analysts’ predictions on Bitcoin’s support and resistance levels. The resistance level is the highest point at which the Bitcoin price can rise above the current price. The support level is the lowest point where Bitcoin’s value should not fall.
Scalping involves using increased trading volumes to make profits. Although it is a risky strategy, experienced traders consider the margin requirement and other important indicators to avoid bad experiences. Scalping requires proper analysis of the specific cryptocurrency, its past trends and volumes, and the daily choice of profitable entry and exit positions.
Unlike other Bitcoin trading strategies, average dollar costs involve buying and holding a fixed amount of Bitcoin on a regular basis. It allows traders to avoid the onerous task of timing the market, with prospects for substantial future returns.
Several decentralized cryptocurrency exchanges allow traders to apply different Bitcoin trading strategies. However, centralized exchanges such as https://yuanpay-group.de/ can limit traders’ options. However, the lack of a precise Bitcoin strategy puts you on the path of losing money.
Social media tips
Social media are the reference platform for information and communication for many people. Thus, many people today make decisions based on what they read, watch or listen to on social media. This has made social media a fertile ground for marketers, targeting the growing pool of online users. However, not all information shared on social media is accurate.
Most ICOs and marketers mainly mention Bitcoin in their reviews and posts as a promotional tactic to drive traffic to their websites and increase the value of their Bitcoin reserves. Many social media tips try to create a false hype that could be disastrous if followed blindly. So, do a thorough research to understand the market before buying Bitcoin.
Fear of Missing Out (FOMO)
Several individuals are rushing to invest in Bitcoin mainly because it is the single most important asset that investors believe will become the next big thing. Such traders invest out of fear of missing out on potentially profitable future opportunities. Thus, they end up making emotional decisions, oblivious to the risks involved in investing in Bitcoin.
Unlike traditional assets, Bitcoin is a new invention with unique pitfalls that could have a huge impact on losses even for experienced traders. So, keep these indicators in mind and invest carefully to avoid losing money.