He made $20 million by trading
He ended his life due to these mistakes
Zhang was a typical 21-year-old with big dreams but no clear direction. Everything changed when he heard his friends talking about how much money they were making with crypto trading. They talked about making millions, and Zhang was fascinated. He imagined a future without his boring part-time job and college stress. #Bitcoin
Without knowing anything about crypto, Zhang jumped in. In just a few minutes, he made $400 on his first trade. He got excited . He thought he had found a way to change his life. So, he made a bold choice: he dropped out of college, quit his job, and sold his mom’s condo to invest more in crypto.
At first, his gamble paid off. His account grew to $500000 and he felt unstoppable. But one day, the market dropped, and he lost $200000. Instead of being careful, Zhang got aggressive. He wanted his money back and more.
Soon, he managed to grow his account to $1000000. He was thrilled but greedy, so he didn’t take his profits. Then, the market turned again, and he lost $300000 in hours. Desperate, he took out a loan of $1,000,000 to keep trading, thinking he could win it all back. He didn’t diversify his portfolio and put all the money into futures.
But he kept losing because he didn’t know enough about the market. He was trading without stop-losses, wasn’t willing to cut losses, and invested randomly in scam projects that got rug-pulled. He made trades based on emotions, not strategy. He would take small profits quickly out of fear and let his losses grow because he hoped they would turn around.
One day, he decided to recover everything and invested all his money in Terra Luna. But he was not updated about the Luna news, and he lost everything. His debts grew, and his account balance shrank. Zhang felt trapped and overwhelmed by his mistakes. The pressure was too much, and he decided to end his life.
Zhang’s story teaches us important lessons about the dangers of trading without knowledge, planning, or control over emotions. The crypto market is unpredictable, and without understanding and managing risks, it’s easy to lose everything.
Risk Management in Cryptocurrency Investments #RiskManagement
1. Diversification: Don't put all your money into one type of crypto. Spread your investments across different assets to reduce risk. This way, if one investment fails, others might still perform well.
2. Setting Stop-Loss Orders: Always set stop-loss orders to limit your losses. This is an automatic order to sell a crypto if its price falls to a certain level. It helps protect your investments from significant losses.
3. Conducting Thorough Research: Before investing in any crypto, do thorough research. Understand the technology, the team behind the project, the market trends, and potential risks. Informed decisions are less likely to be driven by emotions.
4. Emotional Control: Don’t let emotions drive your trading decisions. Fear and greed can lead to poor choices. Stick to your strategy and plan, regardless of market fluctuations.
5. Starting Small: Especially when you're new to trading, start with a small amount of money. This way, you can learn and make mistakes without risking large sums.
6. Staying Updated: The crypto market moves quickly. Stay updated with the latest news and developments to make informed decisions.
7. Setting Realistic Goals: Have clear, achievable goals for your investments. Don’t expect to get rich overnight. Focus on steady growth and be prepared for setbacks.
8. Understanding Market Cycles: Recognize that markets go through cycles of booms and busts. Being aware of these cycles can help you make more informed decisions about when to buy and sell.
9. Using Cold Storage: For long-term investments, consider using cold storage options like hardware wallets to protect your assets from hacking and theft.
10. Risk-Reward Ratio: Assess the risk-reward ratio of each trade. Only enter trades where the potential reward outweighs the risk, and be prepared to exit if the trade goes against you.
11.Limiting Leverage: While leverage can multiply gains, it also increases risk. Use leverage sparingly and understand the full extent of the potential losses it can bring.
12. Learning from Mistakes: Every trader makes mistakes. The key is to learn from them and not repeat them. Keep a trading journal to track your decisions and their outcomes.
By following these practical strategies, you can manage risk effectively and increase your chances of success in crypto. Remember, the key is to stay informed, be patient, and avoid making decisions based on emotions.