Are you struggling to make money trading bitcoin on a consistent basis? If you answered with a resounding “Yes!” you are not alone.
Despite what they might claim on Twitter, virtually everyone fails at trading. One study found that 96 percent of forex traders lose money and quit in disgust, and it’s likely that active crypto traders suffer from similar failure rates.
And it’s all because they make the same mistakes again and again.
But as this excellent Twitter thread by pseudonymous trader Bitcoin Macro reveals, you don’t have to resign yourself to the same fate.
Here are four reasons your crypto trades keep failing and why you should alter your strategy accordingly.
Bottom-picking is one of the most profitable plays you can make in trading cryptocurrencies. It’s also one of the most difficult times to pull the trigger.
First, the bleeding stops. After a downtrend lasts for months or even years, suddenly the asset ceases falling below a certain price level. For bitcoin, that price was $3,000 during the crypto winter last year.
Second, the asset begins trading at a certain price range for an extended period of time. In bitcoin’s case, that was between $3,000 and $4,000.
If you spot these two signals, chances are the bottom is in. When the bottom is in, you’ll have plenty of time to accumulate. Trader Bitcoin Macro perfectly illustrated this reluctance in one tweet.
The signs were there. All you needed to do was hit the “buy” button, and you’d be up 300 percent today. But you were too scared to pull the trigger.
In trading and investing, emotions are expensive. Any form of emotion, such as fear or euphoria, can cost you money.
In a bull market, people should be printing cash while they sleep. However, fear prevents many from entering the market at opportune moments, especially during pullbacks. As a result, they get left behind when the asset resumes its uptrend.
Bitcoin Macro sums this up in one tweet.
If the market is in an uptrend, every correction is a chance to buy cheap. You don’t have to be an expert to know that. Unfortunately, emotions take precedence for many people, especially in volatile markets like crypto.
Persistence is the key to success in many fields, but not in trading. Traders must be ultra-flexible. They have to be able to switch their bias based on the information given to them by the market.
Unfortunately, many traders struggle to shake a specific image in their mind. They hold on to that image even though the market is telling them to let go. Consequently, they suffer tremendous losses. Analyst Bitcoin Macro encapsulates this pitfall in one of his recent tweets.
The market is never wrong. Therefore, you have no reason to go against it if you want to be consistently profitable.
Legendary trader Jesse Livermore once said: “The money is made by sitting, not trading.”
All successful traders know this by heart. You either wait for the perfect setups, or you follow the trend. You don’t sweat the daily fluctuations when your chances of success are high.
However, most traders do the exact opposite. They chase almost every opportunity in their hunger for profits. Precious mental energy is wasted, and stress builds up. As a result, these traders can’t execute the proper trade when the right situation arises.
Bitcoin Macro explains why position trading is the best form of trading.
From experience, I can say that sitting on your trades is one of the easiest ways to supercharge your net worth.
Trading can be a difficult game to play, and many tend to quit. However, if you avoid the pitfalls presented by Bitcoin Macro, your winning probability will tremendously improve when trading crypto and other assets.