Trading is the act of buying and selling anything. When you trade, you give something (mostly money) to get something (either goods or services).
Cryptocurrency trading is the act of exchanging crypto assets on a crypto market. A crypto market is known as an exchange. Since all crypto assets are money basically in different currencies, traders take their currency to a crypto exchange to sell for another currency which could also be crypto or fiat.
Crypto trading has become more and more popular as crypto adoption grows. It is now effortless to trade crypto assets given the number of exchanges out there and the ease of access.
Are you already a crypto trader and have been on a losing streak? Here are 5 of the possible reasons:
1. You don’t do adequate research
There are several tools used in doing research in crypto. Doing research could be split into Technical Analysis (TA) and Fundamental Analysis (FA) of a particular crypto asset or project.
TA involves using the previous price action of a particular asset to predict future price action. You need knowledge of TA using a charting tool such as TradingView to accurately predict the price action of a crypto asset. FA on the other hand involves general research about a project or asset considering factors such as the team, ATH and ATL prices, liquidity, community, roadmap, tokenomics, etc.
All this information is usually publicly available. Being unable to find such information about a particular asset or project is probably a red flag depending on the reason the team gives. Thankfully, crypto projects have communities that are open to the public where anyone can go and directly ask questions from the team members about the project and clear any uncertainties.
Some tools for performing research about any project or asset are CoinGecko, CoinMarketCap, Defi Llama, Defi Pulse, TradingView (for charting), etcetera.
Read: Some Things You Need To Know Before Investing in Crypto.
2. You are overtrading
Trading crypto involves a plan, a strategy, patience, and a lot of backtesting. Many crypto traders ride trends and eventually get false confidence in their skills when in reality, they’re just lucky. Traders without a strategy or plan that has been backtested severally cannot consistently trade the crypto market and remain profitable over time.
If you’re a long-term holder (which has its benefits), you should be leaning on FA to make your investment decisions and you should be able to exercise patience when the market isn’t moving in the direction you want it.
For short-term holders who want to consistently trade and make profits, you must stay true to a strategy that has been proven to work and avoid overtrading. Whether you’ve been on a winning or a losing streak, overtrading is a result of emotions, and emotions should be avoided when dealing with your investments and trade decisions.
3. You FOMO buy and PANIC sell
FOMO is an acronym for Fear Of Missing Out. It is an emotion that describes a trader who quickly jumps on a trend because other traders who have joined earlier are already in unthinkable profits and there seem to be more chances of upside. FOMO buying is an emotion and as stated above, emotions aren’t helpful in making wise trading or investment decisions.
PANIC selling just as FOMO buying is also an emotion that makes a trader quickly jump out of a losing trade due to fear of more loss usually altering his initial plan of long-term hold, stop losses, or exit points. This is also bad; not following your initial trade plan will result in disappointment and regrets but when you follow it, you already expect any of all possible outcomes so, no outcome will surprise you.
4. You buy into shilled projects by celebrities and influencers
In the crypto space, no one is coming to save you. Whatever you do with your money is 100% your responsibility. Knowing this fact, you shouldn’t take financial advice from just anyone especially influencers and celebrities who have little or no expertise in such a field.
Everybody wants to make money and in crypto, you want to be part of those who buy first and sell first. Buying last and selling last simply means you’re buying the top and selling the bottom. Influencers know this, so, they fill up their bags and then shill them to the public and a lot of people buy, thereby providing sufficient liquidity for them to exit at high prices. They’ll tell you when to buy but not when to sell. In the end, you’re only used as exit liquidity (think of it as a retirement plan).
5. You don’t have access to timely information
The market is moved by liquidity and volume. Buying pressure makes prices go up and selling pressure makes prices go down. Knowing exactly when volume comes into the market is golden information that you can use to your advantage. If you sleep on the charts, you may discover this in time and make your decisions but the best way to have access to such information is to be a part of active crypto communities where there are a lot of traders.
Whales (holders of huge amounts of a particular asset) and traders are not exactly the same. Whales trade and their trades move the market; traders study the trades of whales (on the charts or on-chain) to make their own decisions and ride on the back of whales. You want to be in a group of traders, not in a group of whales.
Whales only let out information that will benefit them if they let it out. If you want to know the next move of the whales, you need to be a whale yourself. Traders on the other hand are usually “obsessed” with studying price action on the charts, detecting volumes, and making predictions. If you’re privileged to be a part of a group containing good and active traders, you would make money effortlessly.
Nothing written in this article is financial advice. Remember that you’re 100% responsible for your financial decisions and nobody is coming to save you if you make wrong choices.
Patience has rewards, not trading is also trading. The market is not going anywhere, don’t overtrade. WAGMI!