Trading crypto comes with many benefits and excitement and there are tons of guides out there on how “get rich quick”, however, there are few topics only on how to deal with big losses.
So we will talk about.
Don’t worry we have all been there, even the more experienced traders manage to blow their bankroll a couple of times. The most important part is how we deal with this and how do we recover.
Manage your expectations, and have self-control.
There is no “one size fits all” in crypto. We are different, not every “bulletproof” trading strategy will fit your particular style, and it will lose you money.
Start with a smaller bankroll or do paper trading before you jump in with a new strategy. Set a daily goal and stick to it. If you met your daily target in profits, do not sway from your original goal and throw more money into a trade. It could work against you, we can’t see the future and in a volatile market like in crypto, anything can happen within minutes.
Don’t chase your losses.
Resist the urge to chase your losses. The desire to get even and recover your losses is not healthy and productive to be successful. Take a step back analyze what went wrong and try to avoid repeating the same mistake. Take a break from trading and come back with a positive mindset.
Set a goal and analyze your trades.
Manage your risk. In such a volatile market as in crypto, one should always consider how much you go in a trade. Avoid leverage trading like the plague ( I understand that those high returns are appealing ) but this is how exchanges try to lure you in to lose most of your money. Most experienced traders don’t use leverage or they use small leverages.
Set a goal for your profits. Even if you could have made more on a trade don’t beat yourself up over it, there are always new opportunities to make a profit.
Analyze how the trades turned out. Even if the trade went against you don’t just jump to the next one, take a look at the chart and evaluate it, maybe take a note. Even if it’s a profitable trade you should always review it (it could benefit your strategy, in trading just as in life we all have different paths and goals)
Have a good bankroll management strategy.
This is probably the most important step of all to consider. With good bankroll management, you can maximize your profitability without blowing up your whole account.
This is where 99% of the mistake starts and blows up your whole bankroll. Don’t just assume that if there were a lucky few your success is also guaranteed. This separates trading from gambling.
Solid bankroll management combined with good technical and fundamental analysis will lead to more profit in the long run.