Cryptocurrency is among the most investigated traded assets nowadays. If you weren't acquainted with the phrase a few years ago, you probably know what it means and have heard at least a little bit about it, which is why you're reading this piece. Why do so many novice investors suffer losses in the Cryptocurrency market? It's not only the Cryptocurrency trading environment where individuals lose money quickly; managing financial losses is always a struggle.

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Experts believe that 95% of dealers end up with a net loss, proving that Bitcoin is vulnerable to the identical market dynamics as well as human emotions as any other asset. The frequently circulated estimate that "95% of traders lose money" is well known among investors. Further investigation suggests that this figure is, in all likelihood, rising. Prospective dealers are consumed by the industry at an alarming pace, only to be discarded.

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A person losing money in Cryptocurrency trading can be attributed to the following 5 reasons:

        1. Social Media Tips

Due to the rise of social media, conventional modes of media dissemination have mostly become outdated. Because of the heavy traffic on the information superhighway, it only seems sensible that advertising would be distributed via these mediums. Implementing "Tips" offered by ICOs or persons who want to sell their coins to boost their value would be a poor idea if you're looking to purchase Cryptocurrencies. As you've probably seen many times before online, anybody may tell you, "My currency is better than yours, purchase this now before it gets more attention and you could miss the train when prices shoot up." They're attempting to generate phony excitement that might lead to catastrophe. Because it is your own money, you should always conduct your own investigation; avoid reading evaluations on social media, since they are often biased.

        2. FOMO

After Bitcoin's initial hype faded, investors were left wondering which alternative Cryptocurrency would emerge as the market leader. Today, more than ever, individuals are experiencing FOMO, or "Fear of Missing Out." We can all agree that since its inception, the value of Bitcoin has skyrocketed beyond anyone's wildest expectations. This has left many individuals shocked and wishing they had invested in Bitcoin sooner. Whenever the rate of a coin rises, investors often panic and purchase in the incorrect place at the peak for fear that it won't fall anymore.

        3. No Precise Trading Strategy

Entering the realm of Cryptocurrency trading blindly is almost like leaping from the peak of the Empire State Tower. The fall is too far for you to make it. You may learn the ropes of trading and, perhaps, make a profit from it by using one of the many available techniques. Hodling, Purchase the Dip, Copy Trading, as well as Stop Limit Order are all a part of this.

        4. HODL

The Bitcoin community has coined the phrase "Retain on for dear life" (HODL) to describe those who continue to hold Cryptocurrencies despite the current bear marketplace. You may prevent your whole investment from being lost by using the "Stop Loss" function, which is available on the majority of trading as well as exchanging platforms nowadays. As soon as you're not losing too much money by holding on, it's acceptable to keep a coin even if its value drops. However, if you got the coin at a very expensive cost and it is now down significantly, you should sell immediately to prevent further losses. On either side, it has been claimed that HODL may be beneficial if done properly and if the currency was purchased at a lower price than it is presently holding.

        5. Leverage - Not Understanding the Calculations and How Fast they get Liquidated

Using margin to trade Cryptocurrency or other forms of leverage may be disastrous if not done correctly. Exactly how does trading on margin function? An investor using 20:1 leverage stands to gain $20 if their trade's price increases by $2, however stands to lose the same amount if their investment declines by $2. You can buy $20 in assets for $1 if your leverage is 20:1. Margin trading and the use of leverage violate the trading adage "do not ever trade more than you can afford to lose" because the trader is already obligated to pay off the loaned money. Simply said, the larger the leverage, the bigger the profit potential, and yet the higher the danger. Since only experienced traders can handle the extreme volatility of the Cryptocurrency market, leveraged trading is inappropriate for beginners.

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.