Topic: Margin trading victims and how to avoid losses - page 3. (Read 611 times)

Definitely. That is the nature of trading. By the phrase above I meant that sometimes the simple things are ignored by newbies and it takes time and money to get it. That's normal stuff for trading

Trading is a personal decision and no governmental body will impose certification of skill in it on anyone except the traders willingly approach a body in charge to examine him and certify him or her for such. 

There are lots of these tools out there, and that is why a trading platform would always put demo practice in place for any intending trader to use and get acquainted to trading platform and practice to the fullest before engaging the real live trade in other to avoid trading in a premature way which is the best way to avoid future losses when you get full knowledge.

Sure. This is one of the effective ways to maximise profits and cut your losses. In brief, the position is enlarged step by step, opening more and more positions if the price goes your way. Thus, in case of success you have more profits, and in case of failure you lose what you risk in a current position.

Here is the illustration I find one of the best to explain pyramid trading illustratively.

May you please explain that pyramid trading in detail?

That what I was writing as the suggestion to act in case of drawdown in the other thread.

5 SIMPLE STEPS TO RECOVER FROM DRAWDOWN

1) Accept that you are losing. It is an integral part of trading. The earlier you accept it, the more money you will save
 
2) Analyse. This is what our trading journals for. I often make screens of the trades to look through them and understand what the reasons for the failure are
 
3) Cut your losses. Part by part reduce the position which causes your drawdown. Make it insignificant for you
 
4) Having got rid of the losing position, you need the recovery:
4.1) Minimize the position size. It would not be so stressful (if you feel you are in tilt, stop trading for some days)
4.2) Understand what your best strategies/tools/trades/markets are
4.3) Use them only. Be it one trade a day or a couple of days. But it should be confident and perfect
 
5) Try strategies:
5.1) Scalping
5.2) Strong trend would be your true friend that time
5.3) My fav pyramid trading (increase the position step by step) and reversal (take profits by several steps)
5.4) Manage stop losses (you can use breakeven strategy), but not rush into it, cutting profits. This point should be applied in a very careful way.
 
Actually, these rules and strategies are applicable in any case. An effective way to cut losses and make more profits with less risks.

Trading alone is very risky because it can either make or break you which means that if you trade accurately then you have higher chance of return but if you only trade by just using your gut feeling or whatever then you might lose everything like the one in the story. In margin trading what made it more difficult is how to handle losses most especially if the leverage that you chose is high like 100x, yes it can give you high profits but you have to make sure everything will go as you planned, before entering in margin trading don’t bet everything try to test it by investing small amount to check if your strategy will still work, the market is unstable and the strategy that you used in the past may not work at present times that’s why you always revisit your trades for you to come up with better strategies if necessary. The market is always changing so don’t be too confident with all you strategies to work all the time.

Yes, that is a major problem. Looks like before starting trades the users are to get a lisense on trading, passing test on basic risk and money management

I don't know... Interested in what exactly happened with his trade. Probably stops did not work. If I were him, I would use a more reasonable leverage. Or position size...

High leverage is deadly look what happen to Chinese crypto fund management firm founder that lost 2,000btc because of 100x leverage. What will you do if you losing that huge amount of money?
Being a trader is not easy you need to be positive all the time dont be stress if you lose your trade. I'm here to this thread to observe what will you guide if you losing money like what happen to Chinese trader.

I see victims of margin trading all the time; this particular Reddit thread is a bit old but details a guy who kept shorting Dash until he got margin called for something like 150BTC when the price of the coin just kept going up. Thread is here (click for link). Pretty good takeaway from that thread is a market can remain irrational longer than you are solvent, especially in cryptocurrency, and you should never get married to a position.

A lot of people are also essentially gambling without a trading plan or a risk management strategy. If you have a good risk management strategy you can actually afford to be wrong quite a lot and still be successful.

Aw I had a similar story a couple of years ago. Thx God I had good friends to stop me at a right moment...

Yeah. It was a terrible revenge trading. Since then I put harsh limits on my daily losses.

What are you suggesting in case of losses?

MAJOR REASONS


1) MM&RM violence (absence?)
2) Psychology (revenge trades, greed, tilt)
3) Wrong position sizing / leverage

P.S. 95% of traders lose because of that (!)

Started this thread after a couple of the events I faced.

The first one was about a Chinese crypto fund management firm founder lost about 2,000 bitcoins in a 100x leveraged trading. Then he committed suicide.

The second one I was told in another thread:

"I already stopped.. I lost almost EVERYTHING… All my crypto and fiat funds… I was always believing in crypto and was buying ETH and BTC at the bottoms and the price was increasing. Even when the bear market reduced the value of my portfolio I didn’t give up.

Then the story was quite pleasant, with the market recovery I was actively speculating and increased my deposit from 0.02 BTC to 0.2. I was really euphoric. That was the time of my graduation and I was thinking to cover my tuition fees by my profits in crypto. I has trading for hours. The feeling of happiness came to me so quickly. And in the same mode it gone…

That time I dot known with leverages. Started trading at Bitmex (I see your screens are exactly from there).
So, I was confident in my strategy. I earned some more money and started my margin trading. That was a mistake. I did everything as before, but with one unexpected market movement I lost everything. Then started a revenge trading. And one more mistake followed. Willing to get back my money I used the ones I was saving for years… What I got is margin call and the one more margin call. The last money was lost tonight… What is left for now is zero. Zero deposit and zero desire. Seems like it is the end of my crypto trader career. Overall, I lost 1.6 BTC, which is probably  not a lot for you… But for me it is everything since I have just graduated. I feel really suppressed  writing it and sometimes I feel like I’d better have killed myself… I don’t know what to do."

We broke the situation down and the author is slightly recovering the deposit.

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That is a really really often stories. Leverage isn’t as simple as many portray it to be. Be careful

I was asked to share the steps to undertake to copy with drawdown.
Here I wil also write on the reasons and the ways to prevent such cases.

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Feel free to share your stories and ways to recover the deposit/stay profitable.


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