The fundamental reason why ordinary investors lose money when trading cryptocurrencies is not that simple.
The main reason for most losses is: having a small position when the price of the currency rises, but a large position when it falls sharply.
The occurrence of this situation ultimately comes down to trading habits.
When buying a rising cryptocurrency, the initial position is often not large, but as the price continues to rise, it is often difficult to resist the temptation to increase the position, ultimately reaching the maximum position during a pullback, resulting in making money with a small position but suffering significant losses with a large position. Although sometimes it is possible to correctly add to the position, trading cryptocurrencies is a long-term process, and this trading habit will ultimately lead to significant losses. Therefore, to avoid this habit, one needs to cultivate the habit of selling high and buying low, rather than the opposite.
Here are some suggestions:
1. Fixed position building: Do not change the position arbitrarily.
2. Only reduce positions, do not increase: Once a position is established, only consider reducing the position and do not increase it anymore.
3. Do not build positions arbitrarily: Especially when the market situation is unclear, avoid blind position building.