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Key Reasons Why Crypto Traders Lose Money

Cryptocurrency trading is the hottest topic right now, and exchanges are opening up to accommodate it. These include Binance, Bitfinex, Poloniex, Coinbase Pro (formerly GDAX) etc. As with any trade or financial market speculation system, you can either be a winner or a loser. The only question is what percent of trades will be profitable for you. In this article, we will discuss some of why crypto traders lose money so as not to repeat them as they occur once more!

If you’ve been doing your fair share of reading up, you must have heard of the 95% statistic. Which is that the odds of losing are very very high. Would you like to know why?  Here’s what we’ve gathered so far.

Lack of experience

Source: bitcoinist.com

Just like in any form of trading, being experienced matters. Experience plays a significant role in your success among being a cryptocurrency trader. Remember that someone who has been involved in cryptocurrencies since its inception doesn’t make them an expert. Everyone starts somewhere, so you better start learning about the basics of trading.

Lack of education

Education is also a critical factor in trading cryptocurrencies successfully because you need to learn all the rules that govern these markets. Trading is all about playing smart. It is simply about making all the right moves. Being well educated on the subject does make a huge difference. Knowledge is power, and if someone lacks knowledge, then there is always room for failure! Which is something we definitely wish to avoid.

Failure to diligently track market prices

Source: thoughtco.com

Tracking your coins can be tedious, especially if you have multiple coins in your cryptocurrency portfolio, which means many wallets. But if you don’t check the price, you will miss out when prices rise and fall. The best way to check your coins is via any popular cryptocurrency tracking app such as Coinfolio.

Now, this is a coin portfolio that helps you track each coin’s performance and provides analytical tools. It also provides live feeds, pricing updates etc from cryptocurrency exchanges. The data is continuously updated by using crypto charts, crypto news and also crypto price alerts.

Failure to keep up with news surrounding cryptocurrencies

When you’re dealing with a system as inconsistent as cryptocurrencies, being aware of the news that surrounds it can be very helpful. News in this industry moves at a fast pace. Suppose you fail to do anything in your power to gather and understand all the latest news surrounding Bitcoin and Crypto. In that case, there’s a possibility that you might lose money unnecessarily.

Lack of patience

Source: business.tutsplus.com

There aren’t any overnight successes when it comes to cryptocurrency trading or investment. You have to wait for prices to rise before selling (and hopefully making a profit); otherwise, you will lose money.

Success results from making rational decisions

There are thousands of different trading strategies out there, and each one is designed to help you make more profitable trading decisions. You can check them all out here. The only way that you’re going to be successful is by acting rationally at all times, which means weighing up your options before deciding on an action to take.

However, statistics show that most people who engage in cryptocurrency trading act emotionally and irrationally. This can lead to tremendous losses. However, one statistic that may particularly amaze you is the fact that people keep continuing to trade even after losing money in this.

Failure to use stop-losses

Source: cloudfront.net

If things aren’t working out with the coins in your portfolio, it makes no sense to hold onto them. There’s a high chance that they’ll go down further in value, so the best solution is to cut your losses while they’re still small enough for you not to notice too much. Setting a stop-loss will allow you to do this.


Cryptocurrencies are one of the most accessible markets out there to jump into, which means that many newbies have been entering the industry in recent times. You can forgive their lack of knowledge if they’re willing to learn; getting complacent means that you’ve already lost. Remember that competition is tough these days, which means the only way for you to survive is by constantly adapting to market changes!

Insufficient research before entering trades

Source: observer.com

Winning with cryptocurrencies is all about two things. 1 Being aware 2. Playing smart. Before making any trade on your cryptocurrency portfolio, you must check all relevant news surrounding Bitcoin & Crypto. There have been dozens upon dozens of instances where good or bad news has significantly moved prices, so check for all relevant information before doing anything rash!

Failure to exercise risk management

Just because cryptocurrencies are risky doesn’t mean that you should jump into any old trade. Remember that you are dealing with your money, and the more calculated risks you take, the better. Take your time, check your options carefully and don’t be afraid to say no when you have to.

All in all, being a cryptocurrency trader can be highly lucrative, but only if you know what you are doing. We designed this list of the most common mistakes made by crypto traders to help you succeed. Before making any rash decisions with your coins, find out what the pros are doing – check it out here!

Also be aware that, of all those who participate in cryptocurrency trading, it is merely a small percentage (5% traders) who actually benefit from it. If you really want to win instead of losing money You will have to develop a well-tested plan, overcome the losses incurred by random reinforcement, eliminate your emotions and impulses (being spontaneous is a strict no no) and learn to become profitable.

This apparently is the only well-known way of joining that exclusive group of 5% traders who actually gain from cryptocurrency trading. Here are some statistics that you may benefit from being aware about:

  1. 80% of all day traders last a maximum of less than two years;
  2. Nearly 40% of all day traders’ day trade for only for as little as a one month;
  3. Within the first three years, only 13% continued to day trade. Also, post five years, only 7% tend to remain;
  4. An average individual investor underperforms a market index by 1.5% per year;
  5. And all active traders underperform by 6.5% annually;
  6. Most surprisingly traders with up to a 10 years’ negative track record continue to trade.

Jaime Hay