Why do so many people lose their positions due to Bitcoin's decline?

wxa7115

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Quote from: bitgolden on January 27, 2021, 03:16:56 PM

Quote from: wxa7115 on January 26, 2021, 03:59:02 PM

risk management and money management are the two most important skills a trader must have, while most traders concentrate themselves on entry strategies to try to enter the markets whenever they think there is a profitable move in the making the truth is that risk management despite not being as exciting is way more important.

But people do not like this because they see this mitigation strategies as playing it too safe as they want to make incredible profits with a small capital and instead of thinking that it is their goals what are wrong and that those goals are going to eventually bankrupt them they decide risk management is wrong and they decide to take enormous risks in order to trade.

I have seen way too many people who are not veterans of trading world, hell even people who have never traded before go into 100x leverage trading. Not even 5x or 10x but 100x leverage, care to guess why? Exactly the reasons you listed. There are way too many people who do not want to work hard and be great at trading, they just want to simply start trading today and tomorrow be rich, because there were tons of people who bought bitcoin early and got richer, so why shouldn't they get rich as well?

But they can't wait for it, they can't just spend few years on becoming a good trader, that would be working and they do not want to work for it, so all they want is get in with few hundred bucks and get out with hundred thousand dollars in a week. Obviously that can't happen but unfortunately as you have seen, those people exists and they are the root of why leverage trading is so scary and risky.

Yes, I am talking precisely about those people, even something like 5x or 10x is incredibly dangerous already and that level of leverage should only be used by expert traders that know exactly what they are doing, but newbies use leverage way higher than that thinking that if they do then they are going to become rich right away and that is simply not the case.

In my mind a trader that is capable of breaking even after one year of trading has way higher chances of becoming profitable than someone like them which takes enormous risks but for the reasons we have listed they are unable to see this.

bitgolden

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Quote from: wxa7115 on January 26, 2021, 03:59:02 PM

risk management and money management are the two most important skills a trader must have, while most traders concentrate themselves on entry strategies to try to enter the markets whenever they think there is a profitable move in the making the truth is that risk management despite not being as exciting is way more important.

But people do not like this because they see this mitigation strategies as playing it too safe as they want to make incredible profits with a small capital and instead of thinking that it is their goals what are wrong and that those goals are going to eventually bankrupt them they decide risk management is wrong and they decide to take enormous risks in order to trade.

I have seen way too many people who are not veterans of trading world, hell even people who have never traded before go into 100x leverage trading. Not even 5x or 10x but 100x leverage, care to guess why? Exactly the reasons you listed. There are way too many people who do not want to work hard and be great at trading, they just want to simply start trading today and tomorrow be rich, because there were tons of people who bought bitcoin early and got richer, so why shouldn't they get rich as well?

But they can't wait for it, they can't just spend few years on becoming a good trader, that would be working and they do not want to work for it, so all they want is get in with few hundred bucks and get out with hundred thousand dollars in a week. Obviously that can't happen but unfortunately as you have seen, those people exists and they are the root of why leverage trading is so scary and risky.

wxa7115

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Quote from: Shayanrajput1 on January 21, 2021, 04:26:06 PM

I have been reading research reports on ZB.com recently. A senior investor said. Liquidation is mostly related to improper fund management. In order to avoid this situation, it is necessary to control the amount of open positions and manage funds reasonably according to your capital.

And that is correct, risk management and money management are the two most important skills a trader must have, while most traders concentrate themselves on entry strategies to try to enter the markets whenever they think there is a profitable move in the making the truth is that risk management despite not being as exciting is way more important.

But people do not like this because they see this mitigation strategies as playing it too safe as they want to make incredible profits with a small capital and instead of thinking that it is their goals what are wrong and that those goals are going to eventually bankrupt them they decide risk management is wrong and they decide to take enormous risks in order to trade.

Fatunad

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Quote from: Hippocrypto on January 26, 2021, 03:01:46 PM

Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Trading financial instrument , derivatives have high risk , and having full knowledge of risk management of position size is a key to make a quality decision. The fundamental impacts news can make you rich or rekt you especially when the hype in social media get built up. Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

You can't move on easily when there's a sudden loss, that's why panic usually the cause of every struggles during Bitcoin's decline. We should be able to withstand once price starts to go down, because if we're dumping our asset totally without having proper analysis I guess you won't be able to gain another profit after correction. Facing the risk would actually benefit us, but be careful in every steps you make.

Dealing with this market would be likely a gamble where you do really need to risk for you to able to earn, this isnt mean that treat it as a gambling though because this one really needs off some serious and good analysis
in regards into your possible next actions to make. Bitcoin price could really decline from time to time because this wont really be called a market if we would able to see continuous price increase.
There would be always a consolidation or accumulation phase where there is a time that it is really needed to be corrected to make it balance. Traders/investors do need to profit
which means theres a selling point.Somehow with due experience you would able to grasp on with this situation.

Hippocrypto

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Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Trading financial instrument , derivatives have high risk , and having full knowledge of risk management of position size is a key to make a quality decision. The fundamental impacts news can make you rich or rekt you especially when the hype in social media get built up. Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

You can't move on easily when there's a sudden loss, that's why panic usually the cause of every struggles during Bitcoin's decline. We should be able to withstand once price starts to go down, because if we're dumping our asset totally without having proper analysis I guess you won't be able to gain another profit after correction. Facing the risk would actually benefit us, but be careful in every steps you make.

Mpamaegbu

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Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Trading financial instrument , derivatives have high risk , and having full knowledge of risk management of position size is a key to make a quality decision. The fundamental impacts news can make you rich or rekt you especially when the hype in social media get built up. Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

Those who continue to fear hardly make anything out of life, trading inclusive. Risks are meant to be taken. Do you know that a lot of people couldn't buy Bitcoin even when it was as low as $3,500 because of fear that it would collapse completely, having crashed from a height of $19,000 plus? It's the same way some will stay out of buying Bitcoin now because they think it's over priced and could be heading south. Risk takers are constantly making the spoils count in this industry because they keep buying when skeptics stay out. However, I am on the path of people taking necessary and calculated risk but not the reckless kind of risk anyway.

CryptopreneurBrainboss

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Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

Fear is the major reason, the amount of fud circulating the market is too much for some investors to handle especially those that are new to the game either because they fomoed into investing in bitcoin or they're not mentally capable of handling the pressure the market presents. They simply want to take the easy way out the very moment they faced such challenges and that's done by letting go of the coins the currently hold.

Bitcoin volatility is also very high, you can see the amount of billions the market losses within minutes of a crash. Those billions are combination of investors funds and some have their in thousands of dollars. That's huge loss to handle and only those with experience can handle such loss without doing something out of panic.

VanityWallets2015

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Foremost, this market is volatile in its nature alone, which makes it more complicated than others. And activities of coin owners add up to this.
Now regardless of the knowledge and experiences, many are influenced and are driven by their emotions whenever there’s a downward trend.
Knowing the market and its movement doesn’t give the certainty of things going the way expected, thus decisions are also shifting, resulting to losing positions for the many.

Kelvinid

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Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Trading financial instrument , derivatives have high risk , and having full knowledge of risk management of position size is a key to make a quality decision. The fundamental impacts news can make you rich or rekt you especially when the hype in social media get built up. Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

Not to wonder why most traders had ended badly. Some never know what they are doing, some just jump into crypto because someone told them to do so. And the sad thing is that they never know the risk they face in trading and obviously they don't have enough knowledge for this.

So many traders got failed and only a few of them stand strong and correct their mistakes that is why they are still in trading until now. If we are on that kind of market approach and accept mistakes and make way to correct them, a big chance to succeed. Besides, no one been on the top instantly but most traders did suffer difficulties before they reach their goal.

SirLancelot

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Quote from: artdisrupt on January 21, 2021, 09:37:49 AM

Trading financial instrument , derivatives have high risk , and having full knowledge of risk management of position size is a key to make a quality decision. The fundamental impacts news can make you rich or rekt you especially when the hype in social media get built up. Many people lost their portfolio because of lack of market structure. Not every dip or rally you jump into. These is my view why many lost during this Bitcoin decline.

I believe it is not that simple. Mainstream media do not talk about crypto all that much every single day during the calm moments, when bitcoin was around 5-7 thousand dollars did you see all those online places, hypes, tv news and many other things that talked about bitcoin? You didn't, why? Because it wasn't interesting, whereas having bitcoin at 40k was super interesting.

This is why I think it is quite obvious why people end up with this kind of behavior, not because they want to get in after they see it go up, but because there is a huge hype all over the world because it went up and they want to be a part of it as well if they can, they didn't check it out because it wasn't news and non-crypto people do not really feel like checking crypto prices everyday normally, but when prices hit this high levels they do end up with checking it out.

kram31

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I observed that every time Bitcoin dropped its price value, almost the majority of the people here in this field of industry
begun to worried and panic, in which is the usual things happened most of the time. While others are buying in the dip while bitcoin price
down in the market.

ChrisPop

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I think the reasons why they lose money is either confusion or risk management issues. By confusion I mean the persons who don't set themselves a timeframe for their positions. You've got to define yourself from the get-go - are you an investor or a trader? If you are a long-term investor you shouldn't look at an intra-day timeframe, not even a daily timeframe.

On the other hand if you are a trader you need to define certain stop-loss and take profit areas. As a trader you make money from the volatility, remember that.

tvplus006

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Quote from: MCobian on January 24, 2021, 05:19:08 AM

It is true that every time Bitcoin drops in price, many people will suffer losses, but there are some people who don't lose when the price of
Bitcoin drops. The person who does not lose is the person who continues to hold the Bitcoin that is owned, and waiting for the Bitcoin price
to rise again. Therefore, we shouldn't panic and immediately sell our Bitcoin when the price suddenly drops. Remember the price of Bitcoin is
very volatile, so if it goes up fast then it can go down fast too. So the key to be patient when investing in Bitcoin, don't be too hasty in making
decisions.

This tactic is more suitable for a long-term hold, but not for a trader. Especially if the trader uses margin trading. It is easier in such cases to sell your coins when they fall, and then buy back at a lower price. Otherwise, you may need years before the price returns to the previous one.

palle11

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Quote from: ?? on ??

Many lose their portfolios because they are just glued to the news especially from social media, social media should not be a reference for making a decision in trading either when buying or selling.

Apart of that people stay with news which is fundamental aspect of trading, they don't balance it with technical and then have good money management plan. We take over zealous risk because of getting rich quick syndrome. This is a big challenge that traders face. If you do good money management then you use stoploss, you are sure to have balance after market close out your order in minus.

MCobian

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It is true that every time Bitcoin drops in price, many people will suffer losses, but there are some people who don't lose when the price of
Bitcoin drops. The person who does not lose is the person who continues to hold the Bitcoin that is owned, and waiting for the Bitcoin price
to rise again. Therefore, we shouldn't panic and immediately sell our Bitcoin when the price suddenly drops. Remember the price of Bitcoin is
very volatile, so if it goes up fast then it can go down fast too. So the key to be patient when investing in Bitcoin, don't be too hasty in making
decisions.

passwordnow

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Quote from: zanezane on January 23, 2021, 12:44:44 AM

Quote from: passwordnow on January 22, 2021, 04:08:30 PM

The FUD this time was about the double spending and it's just another false claim by those articles that were made about it. Yeah, it may have been stronger within a day or for several hours. But it didn't became stronger after its drop.
You go to check the price of bitcoin and it's been up again and it has quickly gone up again. If that's what he meant about of market structure, it doesn't have to be similar with stock market.

It is good for the traders to be fair, with the current dump and then a surge back up is a good way to earn some profit, in a way God bless for FUDs for making traders get richer with a temporary dump.

Short term traders can't be rich that quick. But they get the opportunities for buying in at the low price and that's already for them to decide whether they hold it or not. These FUDs that certainly comes at the right time serves them the right time to buy. That's the signal for them to start buying and if they don't, they'll wait again for the price to get lower than what it did this time. But it's impossible for it to recover and those who have lost already that sold at the dip and loss will have to find another time to buy.

Rengga Jati

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I do agree with those major reasons and conditions in which they mostly happen.
However, there is another thing also that can break those rules so easily even we have those all. That is our emotional management, never put aside this because emotion management is one of the keys to managing our ways to make profits or get risks.
Many people lose during this Bitcoin decline because of:
- Panic
- impatient
- lack of consideration
They may feel that the price is going down and declining and feel bad about cannot increase again. panic sell and panic buy really often happen. If you are not though and ready enough with any type of market condition, you will end up taking higher risks

Ridwan Fauzi

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Seem like you are familiar with whales bot in telegeram right? When bitcoin price fall at least 2% there will be many investor who lose their money, also when bitcoin price up at least 2% there will be many investor who lose their money as well. Honestly, I'm leave the telegram group, I myself felt not comfortable when the notification come continously, it is not good for a trader.

Also, I just thought that such practice is the provocation of every whales. They are willing to waste their money then many people are hooked and when everyone is trapped by the scheme they will enter with a very large capital so as they can cover the losses they spent previously. It was just my stupid thought to convince me that I had to leave the group. Because a trader needs calm, every strategy he makes must be based on analysis, not based on rushed fear and greed.

Reid

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A quality decision over a volatile market?
It's not that easy, or let us just say it's easier said than done.
When you are manually doing it there will always be a bad decision and you will have to live with that.
There's already an $8k change for just weeks. Some traders did not even expect a dump like that to happen.
It looks really strong upwards of $50k until recently. Undecided

Sterbens

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the point is easy panic and mentally not ready when experiencing a decline in prices. it's just about how strong the mentality of someone who really understands managing the finances in a portfolio. if we think bitcoin will be like any other altcoin, then it is true that it is not only the losses that can be obtained, failure to manage position size will definitely have a bad impact.

Topic: Why do so many people lose their positions due to Bitcoin's decline? (Read 305 times)