Is the crypto market always against you?

Written by Pedro Lopez

April 15, 2022

The cryptocurrency market is a very volatile one to trade and many starting traders tend to get caught in not favorable trends for their positions. Holding a losing trade for too long increases the risk of being liquidated, especially if you’re using leverage, no matter how low it may be. If you feel the crypto market is always against you, there are some ways to help you recognize your mistakes and place yourself on the safer side.

It is imperative for traders and investors to have control over their emotions when high volatility enters the market, as it could make you get out of winning positions and stay longer in the ones you never should have started.

Step 1: Recognizing the problem

The very first thing a trader should do is to identify the mistake, in order to never repeat it again. Sometimes a trader places an order when he wants to enter the market, not when the market is actually fit for a specific position. This will increase the chance of losing money and making the trader even more desperate in the aftermath.

Here are some of the most common mistakes traders make:

  • Setting unsafe Risk/Reward ratios.
  • Acting over impulses on the market (revenge and greed are often the reason).
  • Thinking an asset will surely reach some price levels in some determined amount of time.
  • Trying to guess the next move, betting instead of trading.
  • Going long/short on an asset that has held a bullish/bearish pattern for too long.
  • Impatience; Every trader should wait for key levels to be tested to have a real confirmation.

Sticking your positions to a trading plan increases the winning chances for each trade and potentially giving you the Return On Investment you want.

Step 2: Do not trade multiple assets at once

It is not a secret that the cryptocurrency market is influenced by certain news and events, so having different positions at the same time could over-expose you to further losses. 

Traders not only carry the risk of being liquidated for some unexpected headlines, but will also have to be calm enough to deal with the stress of having multiple running trades. Sticking to a specific trading pair and holding one position at a time helps you have even more control over your capital and is good for your risk management strategy.

bitcoin trading market data chart. virtual cryptocurrency concept

Step 3: Wait for the right confirmations

The best trades are always done when they are compatible with the current market trend. Therefore, you should always wait until you get all the necessary confirmations to jump on a bullish or bearish rally.

Temporalities matter a lot and traders that focus on the short time, while expecting to gain long term gains end up experiencing terrible losses.

For this, a trader should learn to draw accurate support and resistance zones where the price can break or bounce, which can tell you what the next move will be. Setting a trade after the right confirmations can make your gains a lot higher and reduce your losing trades considerably. Succesful traders have a consistent mommentum.

In Crypto University, we encourage our readers to be careful and consider all the right tools to improve their performance in the crypto market.  Being informed and having awareness of volatile market conditions will improve your results.

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