Why do people lose money in the crypto market?

[Sonu_titu]

I was reading some article and came across some common reasons why people lose money in the crypto market. I felt Newbies will be helpful from this. Some of the reasons are:

Trying to get rich faster: For example, if the price of a coin is increasing and it has reached a peak, one will try to invest on that without thinking about the future rate down fall. Due to FOMO, the people will rush to invest on it without thinking much.

Taking profits early: If the price is surging drastically, one will be eager to invest on that coin without waiting for it to increase more. Will be in a loss, if we try to invest early.

Following the Crowd: By seeing some trading sites or trading groups investing on a particular coin, following them blindly without checking the actual price chart of the coin and investing on it, will lead to a loss. My advice to newbies, please do not follow the crowd blindly without proper investigation before trading.

Lack of Knowledge: Last but not the least, all these reasons why people lose money is because of lack of knowledge.


>> What are the other reasons why people will lose money in the market? Please share your thoughts on this.


Please check the image below, where you can understand better than the text explanation.




Image source

[1715108543]

1715108543

[1715108543]

1715108543

[bitmover]

About taking profits Early.

One should never regret taking profits.
You can have a strategy, like 10% profit every 50% gains, or 100% gains, whatever.

I only took profits from altcoins, to buy bitcoins with them
But you can take some profits on Bitcoin, and if the price goes down you can buy back more, or just keep your cash. You will feel better in bear market times.

[CryptoInsights]

Practice and Knowledge are the factors that can give the balance in the R:R ratio.

One great point that you noted that I agree upon is that blindly following the crowd is never advisable. People should always follow there strategy and whatever there study say.

[Kamog]

Basically the major reason people loose money in the crypto market is because they don't know/have enough knowledge about what they're about to do before investing in it. Someone who has enough knowledge won't fall under the other categories you mentioned.

[NeuroticFish]

They lose money because of greed and impatience.

These two reasons make them invest near ATH and sell later at a lose, especially because they've invested money they actually need (and don't afford to lose).
These two reasons make them invest without a basic research, paying high fees (or use scam sites), investing late (ATH), investing in scam ICOs.

[GreatArkansas]

Basically the major reason people loose money in the crypto market is because they don't know/have enough knowledge about what they're about to do before investing in it.

It's so common problem of newbies on cryptocurrency market. That's why it's really much better if every new people entering in crypto will take note this, and I think it is not only on crypto applicable, even in non-crypto; you are investing in something you don't know? Then it is really a waste of time and money.
Just like what Warren Buffet said, "Never invest in a business you can't understand."

[peter0425]

I would say education is the main reason why people lose so money here. Just look at how many newbies bitching around saying that they have lost so much money. It's because they don't know what they've been doing. They just shell out money and 'hope' that it will give them good profits in short amount of time.

[nakamura12]

Trying to get rich faster: For example, if the price of a coin is increasing and it has reached a peak, one will try to invest on that without thinking about the future rate down fall. Due to FOMO, the people will rush to invest on it without thinking much.

Trying to get rich fast or faster is the same as being greedy where it won't do good at all.

Taking profits early: If the price is surging drastically, one will be eager to invest on that coin without waiting for it to increase more. Will be in a loss, if we try to invest early.

People should be opposite with this one. It should be investing to a coin that can survive in the long run and avoid such loss or missing the chance to take profit when price of the coin goes up.

Following the Crowd: By seeing some trading sites or trading groups investing on a particular coin, following them blindly without checking the actual price chart of the coin and investing on it, will lead to a loss. My advice to newbies, please do not follow the crowd blindly with proper investigation before trading.

Do you mean "please do not follow the crowd blindly without proper investigating before trading.

Lack of Knowledge: Last but not the least, all these reasons why people lose money is because of lack of knowledge.

As this saying goes "There Is No Knowledge That is Not POWER". Having knowledge about it would also help you with your investigation or research about the coin you wanted to invest in and that is why it's important to have knowledge at what you are trying to do.

>> What are the other reasons why people will lose money in the market? Please share your thoughts on this.

Other reasons why people will lose money in the market are:
1.) Doesn't having a clear strategy or trading plan.
2.) Completely forgetting about risk management.
3.) Did not learn or don't have any idea about "TA" (Technical Analysis).
4.) Do not break your portfolio.
5.) Leverage.
6.) Not understanding the calculations.
7.) Following the "Social Media Tips.
and more reason.

[Sonu_titu]

Do you mean "please do not follow the crowd blindly without proper investigating before trading.

Yes, I meant - "do not follow the crowd without proper investigation before trading". It was a typo error, I have corrected it. Thank you!

Other reasons why people will lose money in the market are:
1.) Doesn't having a clear strategy or trading plan.
2.) Completely forgetting about risk management.
3.) Did not learn or don't have any idea about "TA" (Technical Analysis).
4.) Do not break your portfolio.
5.) Leverage.
6.) Not understanding the calculations.
7.) Following the "Social Media Tips.
and more reason.

Yes, I agree that these are the other reasons why people will lose money in the market. People should make note of all these points before investing.

[Thanasis]

I would say education is the main reason why people lose so money here. Just look at how many newbies bitching around saying that they have lost so much money. It's because they don't know what they've been doing. They just shell out money and 'hope' that it will give them good profits in short amount of time.

Crypto is something new so people can't come into conclusion about which one need to do while holding the coins so either they cash out too early or just holding the dying coin.Just like OP said lack of crypto knowledge made them to be in losses most of the time.

[pooya87]

Trying to get rich faster: For example, if the price of a coin is increasing and it has reached a peak, one will try to invest on that without thinking about the future rate down fall. Due to FOMO, the people will rush to invest on it without thinking much.

Taking profits early: If the price is surging drastically, one will be eager to invest on that coin without waiting for it to increase more. Will be in a loss, if we try to invest early.

Following the Crowd: By seeing some trading sites or trading groups investing on a particular coin, following them blindly without checking the actual price chart of the coin and investing on it, will lead to a loss. My advice to newbies, please do not follow the crowd blindly without proper investigation before trading.

these 3 are the same exact thing and you are wrong about the reason of losing money.
all of these are explaining the everyday situation of the altcoin market. people see the hype ("follow the crowd") and buy in a shitcoin because they want to make a large amount of profit quickly ("get rich faster"). the reason for losing money is not this purchase. instead the reason is not selling or selling too late. you see when you buy a shitcoin that is getting pumped because of some hype you should expect its dump too. so you should plan on cashing out, if you don't sell then the dump will come and you will end up losing money but if you sell, then you take out your profit and stay clear of the dumping part preventing any losses.

[DoraNile]

The most popular one is getting rich quick,many came into crypto world with the mindset of getting rich quick and they ignore every important steps like learning how crypto works which leads them to losing huge money

[hd49728]

That is what I wrote in another thread, but key ideas are suitable for the thread.

In reality, what you need are experience, and wrong decisions.
It is a long process, a likely a cycle:
Wrong decisions help you to get experience, then experience help you to reduce wrong decisions per total decisions and increase proportion of good decisions.
However, the key point to help you survive even if you make wrong decisions is:
Use small part of your funds to invest or trade at the starts. Then you will lose small fund for the first time, second time, and so on.
After 3 to 4 years, you will make enough wrong decisions, spend enough time in the market, then get enough experience; you might see your progress and your decisions become much better (higher rate of right ones). After that, you can use most of your fund to invest/ trade.

How to make your decisions right?

Moreover, if people have pressure to get earnings on daily basis, they will most likely fall into wrong decisions. Basically, people are more easily to lose control on their emotions, decisions when they have to deal with pressure. Pressure results in wrong decisions, wrong decisions in turn will cause losses at the ends.

I want to add one more point:
Working full time in crypto (investing, trading, or mixture of investing and trading) is hard things to do, especially if you have to do it for both purposes:
- Earning money for you and your family. It is unavoidable task; and you neither can live without money nor your family. Especially if you won't have savings (huge savings) to use in the meantime to wait for your coming fortune from crypto.
- Getting rich in crypto, through trading/ investing or both of them is difficult: Because it is game of whales, and you - as small investor, trader, just be able to follow their movements. It means you might witness a two- or three-year period of wholy bear market. If such market period occurs, you will have to struggle with your life, and your family too.
My recommendation is:
Keep working in what you expertise on, and keep invest in bitcoin/ crypto for your fortune in next 2 or 4 years. At least you will be safe, and then will have chance to get rich (at least, you won't have to use your past savings).

[gentlemand]

A lack of discipline and an inability to control emotion are the main ones, plus not having any type of plan is deeply unhelpful too.

Another problem is marriage. People get married to a price they're convinced will arrive and never does, or get married to an alt despite it showing zero signs of life or certain signs of doom.

Most people are deeply unwilling to acknowledge when their moves and beliefs are wrong even when the evidence is shouting in their face. Instead of flipping they grimly hang on until they're absolutely fucked.

Successful traders are willing to instantly discard whatever their previous plan was when it's obvious it's not the zeitgeist any more. 

[BQ]

Time in the market beats timing the market 

[rosezionjohn]

Taking profits early: If the price is surging drastically, one will be eager to invest on that coin without waiting for it to increase more. Will be in a loss, if we try to invest early.

This does not make sense. Why would we be in a loss if we take profits early? You don't call it profits if you are at a loss.
Did you copy this from somewhere else and removed some of the text?

[cryptohulp.nu]

Well people are always saying that you should store it offline, but if you do not store your private key safu it does not matter.

[boyptc]

I can't understand why 'taking profits early' is a reason why people lose money.

You are taking profit so why lose money? it should be greediness. We are bound to think of higher profit and those people who are taking profit earlier are even wiser than those who greedy people and want more increase.

They can ride the swings and use the profit they had as their purchasing power for lower price.

[OranG3]

I can't understand why 'taking profits early' is a reason why people lose money.

You are taking profit so why lose money? it should be greediness. We are bound to think of higher profit and those people who are taking profit earlier are even wiser than those who greedy people and want more increase.

They can ride the swings and use the profit they had as their purchasing power for lower price.

+ Agree. However it came to me after multiple HODL-disasters  

[Successmaniac4]

People lose money due to panic selling. And also FOMO scares people to buy when they are not even ready to invest. Then unexpectedly, the price just drops. People also lose money due to lack of information on a particular coin.