5 causes of big losses with Bitcoin and trading methods to avoid failure

“I don’t want to fail with Bitcoin”
“I want to know how to avoid big losses”

This is an article that can help you solve such problems.

It is easy to start trading Bitcoin, but by reading the Bitcoin investment failure cases introduced in this article, the causes and countermeasures for large losses, and low-risk trading methods, you can start trading Bitcoin without fear of large losses. You can

5 reasons for Big Losses and Failures with Bitcoin

We will introduce the causes of large losses from Bitcoin trading.

1. I couldn’t cut my losses

This is a case where you are unable to cut your losses and your losses continue to grow.

Loss cutting is the act of selling virtual currency, etc. held at a loss and fixing the loss. It was originally a term used in stocks, FX, etc., but it is also increasingly used in the trading of virtual currencies, which are similar investment products.

If you don’t cut your losses, you may find yourself in a position where you can’t start over again. If the market price falls more than you expected, it is important to cut your losses and start over, even if you have suffered an unrealized loss.

However, there is also the idea that even if you cut your losses, there is no problem as long as you are making a total profit. When trading, keep in mind that all the profits from the trade should exceed the losses.

2. I expected the market to recover.

This is a case where you expect the market to go back and end up losing a lot of money.

Some people who are already trading virtual currencies may remember the huge market crash that occurred from 2017 to January 2018. Many people who suffered heavy losses at that time were hoping that the market would someday return to normal.

Market prices indeed fluctuate in a fixed direction, undulating up and down. This is because an unspecified number of people participate in the market, and some people want to lock in profits at a certain price, while others want to newly participate in the market.

However, no one knows how far the market will recover. It would be a different story if there was a clear basis for thinking that the market would return, but expecting the market to return even though there is no evidence is just relying on God. To avoid making mistakes, be sure to perform fundamental analysis while trading.

3. I borrowed money

This is a case where you end up in debt and go bankrupt.

Cryptocurrency became a temporary boom in Japan, and some people were misled by the enthusiasm and said things like, “The future of virtual currency is worth investing in, even if it means borrowing money.”. There is no guarantee that you will make money in the world of investing. There is always some degree of risk.

As a result of borrowing money, there have been cases where the market did not move as expected and resulted in personal bankruptcy. Make sure to only trade with the funds you have.

4. Asset management didn’t go well.

This is a case where asset management is not done well and losses are incurred.

The more currencies you hold, the more effort you will have to check to avoid large losses due to fluctuations, and the more mistakes you will make as a result.

Additionally, virtual currencies can be traded even during the night. Prices drop when you are sleeping or when you don’t have time to spare due to work, and you end up incurring huge losses without even being able to cut your losses.

5. Drowning in success experiences

This is a case where you can’t forget your past successes and end up losing money.

People who have had the experience of seeing their assets increase 10 to 20 times just by owning virtual currency are more likely to get caught up in past successes, increase their capital baselessly, and incur losses.

In reality, such success experiences do not occur over and over again. It is important to continue investing with an eye to the future without getting caught up in success stories.

Measures against big losses in Bitcoin

There is always a possibility of making a big loss when investing in Bitcoin, but you can reduce the possibility of making a big loss by keeping a few tips in mind. Therefore, in this paragraph, I have summarized ways to prevent large losses in Bitcoin (BTC).

Learn the basics about virtual currency

First of all, you should have some basic knowledge of virtual currency. By remembering trading terminology such as the difference between leverage, short, and long, you can prevent losses due to operational errors.

Also, when gathering information online, if you don’t understand basic terminology, you may end up remembering the wrong information. Some people may want to put it into practice right away, but it’s best to start with the basics.

Decide on your own trading rules

Decide on trading rules to minimize losses.

By setting rules like “I’ll cut my losses when the price drops to what extent!”, you can avoid big losses without being influenced by your emotions.

If you keep repeating it, you will be able to get a good idea of ​​how to cut your losses.

3 trading methods with low risk of big losses

Now that you understand how to prevent large losses in Bitcoin (BTC), we will introduce a trading method that has less risk of actually causing large losses. Please use this as a reference for future transactions.

1. Diversify your investments

Diversification is the most famous method in the investment world to avoid big losses. In the world of virtual currencies, you avoid risk by buying multiple types of currencies out of countless currencies.

Coincheck allows you to purchase more than 26 types of currencies, so it is recommended for diversified investments.

2. Dollar cost averaging method

Dollar-cost averaging is a method of mechanically purchasing financial products in fixed amounts, rather than purchasing them all at once. Since you don’t invest a lot of money at once, you reduce the risk of losing money.

In addition, if you use dollar cost averaging during a downtrend, you can expect the effect of lowering the average acquisition price, and you can also increase the number of coins you originally purchased. What differs from the so-called “napkin”, which buys more stocks only when the market is going down, is that you will continue to buy a fixed amount even when the market is going up. In that case, if the market continues to trend upward, profits may increase.

3. Gachiho

Gachiho is an abbreviation of the word “serious hold” and is a trading method for holding Bitcoin (BTC) for the long term. Short-term trading requires a considerable amount of knowledge and experience as it is necessary to make profits with small price movements, but with Gachiho, even beginners can easily engage in it because all you have to do is own the currency.

Also, if you buy and sell frequently in short-term transactions, you will incur commissions, but with Gachiho you will not have to repeatedly buy and sell short-term, so you can reduce the cost of commissions. However, if you continue to gamble, your losses may increase, so you may need the courage to cut your losses. It is important to assess the situation and consider whether or not you should be serious.

Create your own rules and trade without big losses!

Did you understand the causes and countermeasures learned from the big loss?
Let’s look back at the causes of big losses and failures with Bitcoin.

• Can’t cut losses
• I hope the market will come back
• and end up in debt
• Poor asset management
• Drowning in the experience of success

To avoid big losses, it is important to set your own trading rules and diversify your investments. If you are about to start investing in Bitcoin, be sure to take precautions against large losses.