Topic: What Can Happen If You Want to Trade Cryptocurrencies, but You Don’t Know How? - page 2. (Read 639 times)

Thanks for these very good examples Pmalek and I really hope this will help someone not to make the same mistake.
Something similar happened to me around 2017, when I was still new to the crypto market and didn’t really know what I was doing.
Some altcoins were making a lot of money at the time and after a recommendation from some friends, it seemed like a really good idea to sell some of my bitcoins and invest in some promising altcoins.
Of course it turned out to be a very bad idea, but luckily I managed to sell some altcoin and buy bitcoin again, so I managed to recoup some of the losses.
You really need to be very well informed and plan everything well, learn the rules of trading, have a clear strategy and plan and exit strategy, otherwise any such investment usually ends very badly.

I am wondering why people complain about getting money, and when they want to invest, they listen to the recommendations of unknown people from the Internet, or the recommendations of friends, or even try to imitate the investments of some.

This does not mean that the sources you mentioned are not accurate and may be biased because they have a negative view of cryptocurrency trading and Gamestop's story in particular.

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Following open sources, research, question, learning, and taking advantage of mistakes is what makes you a successful trader, as there is no trader who has not lost before, but all the traders who have achieved success benefited from their previous experiences.

I think these are very good examples that every novice trader should study carefully. It's nice to read successful traders' stories, but one should remember that many of them have years of experience behind them or simply got lucky at a certain point.

Market trading is a zero-sum game which means only one thing, it is win-lose situation. Traders can't all be winners and many of them will lose. In order to win, a trader needs to constantly come up with smart and strong trades. Sounds easy, but not at all. Sometimes a trade does not go your way and you have no where else to go. It is frustrating and at times takes a toll on your mental strength, not to mention your finances.

Before trading, a person must do a lot of research. How does the trade work, how does success come. Again, what can be lost from the trade. It is not right to trade without knowing everything well. Then he must face loss. You use trade can be big and you can be small.

Note frist: The precondition for trading is to control yourself in any situation.

And cheaper. I mentioned in a different post a few days ago that people think they need that 1 Bitcoin, otherwise it doesn't make sense investing. They won't consider purchasing 0.1, or 0.004, that makes no sense to them.

Because Bitcoin is so expensive, and altcoins are much cheaper, some newcomers believe that it's only a matter of time before another coin reaches those price valuations of Bitcoin. All they have to do is find and invest in the right one. To be on the safe side, they prefer investing in a bunch of the contenders. However, they are not even considering the fundamentals and the reasons why Bitcoin is where it is and why other assets never will be.   

What attracted me to cryptocurrency was also my friend's wealth story. Unfortunately, the end of the story is that he also lost his wealth in the end. I also lost part of my principal.

I second this, and actually this is where the problem stems from, I think quite a lot of individuals, the news, and social media gives people the wrong impression about trading, portraying it as a bed of roses were one can earn a living with little or no effort, and more often than not, it's newcomers and non-crypto people that are excited and swayed by this, for example, sometime last month, my friend who has never bought or traded cryptocurrency ever before came up on an advert of people (scammers by the way) who posed as 'crypto experts' requesting a very high amount of money to teach people how to make X amount of profit in a very short time, my friend immediately fell for this, but lucky enough sought my advice first, and of course I dissuaded him from it.

One can imagine, this is someone who knows nothing about crypto, but immediately wants to make profits from it, taking it to be like a gambling game that requires zero skills. The desire to 'get rich quick' is definitely another problem, and for people who wouldn't seek, nor take advice, they'll definitely have stories to tell, not success stories, but on how they got scammed and lost their funds.

I very much agree with this:

Most of the newcomers assume that it's too late to invest in Bitcoin and decide to touch altcoins whose market cap is much lower. Indeed, they're more likely to go upwards percentwise than Bitcoin, but they're also more likely to go downwards or completely disappear. In this unethical crypto-industry, there are many hidden dangers such as Ponzi schemes or scams. In my opinion, even experienced traders should avoid dealing with such projects unless they're the creators or are related with the creators.

I'd also avoid margin trading. It's gambling squared.

It depends on the exchange you are using, some exchanges can even accept less than $1, some exchanges will require traders to have a minimum of $10 like on Binance.

The amount can also be less for leverage (margin/future) trading on the same exchange depending on the leverage used.

The thing is, cryptocurrency exchanges have anticipated such things, and many of them have relatively high minimum trading limits that you have to respect to be able to open a position. If you try to take that $50 in crypto, and you want to initiate several trades, you might be surprised when you see a notification that the sum is not big enough. And there is also the minimum withdrawal amounts + the fees to pay attention to when withdrawing. I don't frequent and trade that often, so I am not sure what those minimum orders look like now, but my guess would be $5-$10 per trade (if not more). Would that be correct?

The people that lose so fast are margin traders or those trading future contract, they leveraged which will make their funds to liquidate as early as possible with only just little price increase or drop depending on the position opened.

Greediness make some people lose, a new trader that have never known how to trade spot that is going for leverage, certainly he will lose. Even if he gained at first, that does not mean he knows how to trade.

Spot trading or 1x (no leverage) is the best for beginners, they should not panic, some will panic because the price of bitcoin or the coin taken is moving against the position gone for, they panic close the market. The price will fluctuate, retrace and retest which would have made them gain as no leverage, and liquidation price is very far which makes such trading less risky.

So saying no to shitcoins, even good traders have high chance of losing all because they trade with shitcoins

Some will start trading with high amount like thousands of dollars and know nothing about trading, $50 is not bad to learn trading for over 6 months or more, it is a sign of patience which is very important in trading.

Some beginners who come to Bitcointalk have a misconception about trading cryptocurrencies. They have heard some success stories and want to replicate them themselves. However, it’s a delusion to think that anyone can become a successful trader overnight, and all you have to do is purchase a few coins here and there, and the profits will start growing.

Trading crypto shouldn’t be taken lightly. Learning how to trade is a slow process that should be mastered slowly and patiently. Unfortunately, YouTube and social media don’t make things better because all they do is show you the glamourous side of trading. The cars, expensive houses, jewelry, and the women.

They don’t tell you about the shattered dreams, lost savings, and uncertain futures due to wrong trading decisions. The reality is, trading isn’t for everyone because not everyone has the discipline to only trade with the money they can afford to lose. So, for many people, buying and holding is the better choice.

I am writing this thread to warn beginners that there is another darker side to profits made with trading. These stories can maybe make you reconsider careless trading decisions or motivate you to learn how to trade correctly by studying the theory of successful crypto trading. A 10-minute YouTube clip is not enough.


1.

Jake is married and lives in the UK. He has a good job, is respected, and can make business decisions worth millions of pounds for this boss. Jake has known about Bitcoin since 2015, and in one of his first trades, he made some good profits.

Enchanted with his early success, he decides to trade with his employer’s funds. He wanted to experience that joy again and make even more money. So he borrowed company funds and invested everything into a risky trade. During the same night, his positions were liquidated, and he lost it all.


Jake lost £1.5 million of company resources, nearly avoided a lawsuit, and is now receiving treatment for crypto trading addiction.


2.

Noor lives in London. She is 30 years old and works as a designer. She lives with her boyfriend, is in love, and the two are saving to purchase their own house.

In November 2020, she became interested in crypto investments and wanted to trade cryptocurrencies. Her first purchase was £10.000 worth of bitcoin, whose value almost doubled, netting her a sum of over £18.000. Delighted with the results, she decided to cash out on bitcoin and invest in XRP and stocks instead. The biggest problem is that Noor doesn’t really know how to trade. She is just motivated by the hype and recommendations she sees from other investors.

But the market turned on her. XRP crashed, causing her to lose most of the investment. She read about the Gamestop stocks going through the roof and decided to recover her losses by purchasing those. Unfortunately, she entered the market too late and lost even more.

To sum up, Noor lost over £23.000 due to poor trading activities, believing the hype, and investing in something she knew nothing about. Her dream of becoming a homeowner has to be put on pause.


3. 

The following story dates back to the ICO frenzy of 2017. Helvis is a regular guy who, like many others, dreamt about becoming rich with cryptocurrency trading. He didn’t have a lot, but he had around $2.000 that he decided to invest.

Influenced by John McAfee and similar crypto influencers, he invested in the privacy coin Verge and in Tron. With those two purchases alone, he managed to turn his $2.000 into $60.000 within a few months. But, since he wanted more, his next decision was to buy Ethereum.

But soon, the market sentiment started to turn, and the prices began crashing. Like many others at the time, Helvis also became interested in ICOs and decided to try his luck with margin trading. Trading with money you don’t even have seemed too good to be true.

Since he didn’t know what he was doing and took too many risks with high leverage trades, Helvis lost nearly all of the $60.000 that he netted on Verge and Tron.


4.

British Youtuber and rapper KSI is another newbie trader who wanted to play around with bitcoin and cryptocurrencies. So in November and December 2020, he invested £2 million into bitcoin and, assumably, some other altcoins. Initially, everything was going great, and KSI made £7 million on those initial investments.

But as it usually happens, he wanted more. Without knowledge and experience about margin trading and trading with leverage, he went all-in on that gamble. He liquidated all of his positions and lost the whole sum of £7 million.   

KSI understands what he did was wrong, and he takes full responsibility for his actions. Nevertheless, he is still bullish on bitcoin and believes in the underlying technology.



Bottom Line

You shouldn’t be discouraged from trading crypto, but you need to realize the dangers associated with it. Without significant research, you are gambling with your own future. As the above examples have shown, with money, you can’t afford to lose.

Before you start dreaming about what you will do with your profits after you discovered the next Bitcoin and made x1000 on your trade, think about whether or not you will miss that money if you lose it. Start small and play it safe. Purchase bitcoin, hold it and be happy that you still belong to the early adopters.

Good Luck!



Sources:

1.   https://www.bbc.com/news/uk-scotland-57268024
2.   https://www.theguardian.com/lifeandstyle/2021/jun/19/life-savings-in-crypto-generation-of-amateurs-hooked-on-high-risk-trading
3.   https://hackernoon.com/how-i-lost-dollar200000-trading-crypto-and-the-lessons-i-learned-5311378p
4.   https://www.independent.co.uk/arts-entertainment/music/news/ksi-bitcoin-youtube-b1885801.html