How many people can make a profit in this cruel capital market? How many people will not give up after losing money? How many people know how they lost money? In the cryptocurrency circle, there are always a lot of people who lose everything, but there are still a constant stream of newcomers participating in it. Some even joked: There are always endless leeks to cut! Because they don’t even know what Bitcoin is, what the trading mechanism is, and who your counterparty is? These basic questions are not clear. Just listen to others’ lies that “this can make a lot of money” and rush into the market. Failure is almost inevitable.

So what causes investors to lose money? Here are some common reasons for your reference.

1. Frequent trading

Many novices trade every day, and they would like to trade every day for a month. As the saying goes: If you walk by the river, you will get your shoes wet. If you trade too much, you will always fail. After you fail, your mentality will deteriorate. Once your mentality deteriorates, you may act impulsively and choose "retaliatory" operations: you may go against the trend or hold a large position. This will lead to one wrong step and another, which can easily cause huge losses on the books, and these losses may not be recovered for several years. If we have 1 million yuan in our account, when you lose 50%, then if you want to get back the remaining 500,000 yuan, you have to make 100% profit on this basis to get back to 1 million yuan. You can experience the difference in difficulty between the two.

Another inevitable reason for frequent operations is that investors participate in transactions without careful consideration. If you operate according to your own trading system, then the waiting time must be greater than the holding time, because the market is only trending 20% ​​of the time, and the remaining 80% is sideways. If a trading system gives dozens of trading signals on a single trading product in one day, then please stay away from it, because in my opinion it is almost impossible for you to make a profit. "Scalping" will never make big money! A high-quality trading system will inevitably try to avoid participating in a sideways market, so it is impossible to operate frequently. The only explanation is that the trader did not follow the rules and operated blindly without thinking.

2. Like to go against the trend

Everyone hopes that their entry point is better than others, but a good entry point often requires "risky tactics", and many people pay the price for it. When the price rises very high, the short sellers are ready to try to short at the high point to get a bigger profit. But they know that "there is no highest, only higher".

Some cryptocurrency traders particularly like coins at historical lows, because if they buy them at this price, their cost is lower than others, and they are simply overjoyed. However, they did not expect that since a coin has hit a historical low, it is likely to hit a lower low, and even within a few months, your coin will be cut in half. They buy at the bottom, and end up buying at the mountainside.

3. Long-term full position

Some "tycoon" friends, no matter how much money they have in their accounts, always trade with a heavy or full position. Once the market goes against them, they can only watch their account losses grow. If you don't sell in the spot market, you may be able to hold on, and if you are lucky, you will get your money back in a few months. But if you do this, you will miss many rebounds along the way because you have no remaining funds, and these rebounds can be used to make swing profits. And not everyone can hold on. Many people will end up selling at a loss and admit their losses.

If we put it in the futures market, or leveraged spot investment, for example, in the 2017 bull market, a large number of investors chose to invest in stocks, which was one of the reasons for the surge in Bitcoin. Many people made a lot of money during the rise, but because of this, when the market fell, those who had not left the market or those who followed the trend and entered the market lost all their money. When you use leverage and do not stop loss, you will face a problem that spot investors have never encountered: liquidation.

4. Like to carry orders

To put it bluntly, holding onto an order means: refusing to admit one's mistakes. Many people lose money not because they don't know how to buy but because they don't know how to sell. There is an old saying in the financial market: the one who knows how to buy is the apprentice, and the one who knows how to sell is the master. It is not difficult to know when to buy, but it is difficult to know when to leave and when to stay.

When should we close the position? Should we close all or part of the position? After closing the position, should we reverse the position or wait and see? These are all questions we should consider in advance. The tragedy is that we don’t close the position decisively when we should. The originally profitable transaction ended up on a roller coaster ride because we didn’t close the position in time. Not only did we lose profits, but we may even suffer losses, which made us suffer psychologically. We may sigh with regret: Oh, I should have closed the position at that time.

Most people are prone to a serious problem: the stop loss is too large but the stop profit is too sensitive. If you run away every time you make a little profit and hold on to losses, of course you may be able to make it back, but when you can't make it back, a failed order can make all your previous achievements vanish.

In addition, people who trade in cryptocurrencies often have too much luck in their hearts. They don’t sell when there is an obvious breakout, and then they can’t control themselves and sell when the bottom comes out. Afterwards, they feel extremely upset and blame themselves deeply.

5. Blind self-confidence and lack of self-discipline

No matter how good the concept of virtual currency is, it will fall if the technical side can't hold up; no matter how bad it is, it can rise if the market is good. This situation often makes many investors very depressed. I often encounter this question: Why do the coins I choose have good fundamentals and excellent indicators, but still fall so badly?

Why did the "good coin" I chose fall? Good fundamentals also need to be combined with comprehensive analysis of the market and the technical aspects of the coin. It does not mean that if the concept is good, it will rise after buying it. Technical analysis is also crucial. Execution strategy is the guarantee of profit. One of the reasons why most people lose money in cryptocurrency trading is because of blind self-confidence, lack of self-discipline, and failure to stick to principles. Once they lose money, they will be in a mess. There can be many principles, but if you decide which principles to implement, you should stick to them.

There are always people, no matter they are new or experienced, who often buy in because they "feel that the price should go up". It can be said that this feeling often harms you. In the early stage of learning trading methods, we must follow the rules we set, that is, every signal must go through the process and judge its pros and cons. When you stick to it, it will become a habit. In the future, every time you encounter a trading signal, you will go through the principles and process again, and make a more scientific judgment. When we evaluate the current market objectively according to the "principles" instead of relying on subjective "feelings" to trade, we are not far from success.