How to handle losses in the crypto market 101:
Crypto trading can be very lucrative; a good trade can change your life — taking you from zero to hero financially. On the flip, a bad trade (or mistake) can cause you unimaginable mental degradation. One you might never have experienced before.
A lot of newbie traders are brainwashed into believing that crypto trading is a get “rich quick scheme” (which sometimes can be, but not in most cases), and this is aided by some crypto influencers who only post their wins and never reveal their losses. When these newbies suck up all their “half-truth” contents, they begin to have the mindset that crypto is a joy ride to making cool cash.
Just like every other business model, crypto trading carries a truckload of risks, and where there is a risk, there is the possibility of loss. Experienced crypto traders understand that loss is inevitable and having a defense mechanism to handle losses is also very important.
Losing money to a trade can be very painful, in fact, there have been countless reports of people killing themselves because they couldn’t bear the pain of losing their money to a candle. Especially those who borrowed money to trade.
Based on the nature of cryptocurrency — your profits and losses are completely your responsibilities; no one is to be blamed if you lose and likewise if you win. Considering this fact; it is of utmost importance that traders devise a strategy that will help them stay sane in losses.
How to deal with losses in crypto trading.
1.) Understand that loss is inevitable and part of the learning process: Losing is inevitable, even the best of traders lose money to crypto once in a while. Rather than brooding on your losses, see it as an experience to learn from and become better. Probably not the preferred way of learning, but it is the most effective.
2.) Avoid revenge trading: There’s a reason why snipers are calm when handling a rifle — it’s basically because they make calculations before taking any actions, they don’t fire aimlessly unlike someone with a machine gun. In essence, revenge trading is like going to the market with a machine gun, firing aimlessly, and hoping to hit some profits. The issue with this kind of trade is that it usually leads to more losses. Why? Simply because the trader is blinded by emotional factors that prevent them from making calculated decisions.
3.) Meditate: A fun fact about meditation is that it helps you gain a new positive perspective during unpleasant situations. It is difficult to think straight when $1,000 is blown, meditating doesn’t bring back the money lost but it helps (traders who practice it) in pushing out negative emotions and creating mental serenity, which is obviously beneficent to the health of a trader.
4.) Go back to the drawing board: Losing a trade(s) shouldn’t stop you from learning or becoming better. Go back to the books, make a review of your trading strategy, learn new techniques, and develop new strategies.
5.) Don’t be silent: Yes, earlier it was stated that traders are responsible for their wins or losses but in cases where you can’t bear the pain of your loss, talk to someone; don’t keep it all to yourself. Studies have shown that simply talking to someone can aid mental healing — reducing stress and bad energy.
This may not be a complete checklist on “How to deal with losses in crypto trading” but it definitely contains the basic knowledge needed to stay sane. If you find this helpful, do share it with a crypto friend.