Do you expect to make a profit every time you trade? Without a doubt! Traders are always hoping to make a profit. No one goes into a trade expecting to lose. In every trade initiation, we assume that that is the optimal time to buy crypto. We cross our fingers in the hopes of being correct. We anticipate winning because it is what we desire. However, trading is a game. There are always losers and winners in each situation. It is also difficult to accept defeat when we lose. As a result, we strive to stay away from it as much as possible.
This mentality is common among traders who are new to the game. They are attempting to prevent losing money. But why are traders thinking in this way? Perhaps the best way to answer this is by looking back at the main reason why they started trading in the first place. And the answer to this is to earn money. They are only interested in making money. Everyone wants to make money as quickly as possible. But not all aspiring traders think like this.
However, if you are new to trading and only think about money, you will fall victim to loss aversion. Investopedia defines this phrase. In behavioural economics, loss aversion is a phenomenon in which individuals perceive a real or potential loss to be psychologically or emotionally more unpleasant than an equivalent gain. In other words, the intensity with which we feel or think when we lose is not the same intensity with which we feel or think when we win. We tend to become biased. The anguish of losing $100, for example, is often significantly higher than the elation of finding the same amount. The psychological effects of experiencing a loss or merely confronting the threat of a loss may promote risk-taking behaviour, which may increase the likelihood or severity of realized losses.
The natural impulse is to want all of your trades to be profitable and successful. Fear of loss can induce investors to act impulsively and make poor judgments, such as holding onto an asset for too long or too short a period. But we need to point out the importance of holding which can be quite beneficial in some stages. You may wonder what is a hodl strategy and make sure you read up on it. Sometimes keeping it for yourself can prove good in the end.
When a trade does not favour a person with loss aversion, that individual is more likely to disregard the trading plan. Rather than closing the transaction, such a trader will keep pushing until he achieves his desired profit. It all comes down to a fear of failing. We constantly want to be correct because it is difficult to recognize that we are wrong. As a result, the majority of self-proclaimed day traders afterwards became long-term investors.
When you always win, it feels different. We get rewarded for doing the right thing. We had been exposed to this system since we were children. When we perform things correctly in school, for example, we receive great praise. In activities like crypto trading, we unconsciously adopt this approach. When we consider it, we might argue that it is simply normal because it is human nature. But the difficulty is that we can’t afford to trade with this attitude. That is why trading is such a challenging profession to master since it goes against everything we are accustomed to.
Another common misunderstanding among new traders is that all successful traders make no mistakes. Well, we cannot blame them for thinking that way because most traders project their winning trades on Facebook, YouTube, and other social media platforms. It is something they brag about. If you are a novice, you will easily fall into this trap. It is important to remember that even the most successful traders lose money. You are simply unaware of it because they do not disclose their trading losses promptly. No one will watch or subscribe to them if they do. They’ll also have a hard time convincing people that they are effective traders.
This strategy is something that fund managers and hedge fund managers do as well. They only show their successful and profitable years as management to potential investors. They do, however, conceal the years of loss. So, if you’re a new trader, be careful who you listen to. Make sure that they are for real. It is important to note that it is impossible to meet a trader who has never experienced loss in trading because losing in trade is inevitable. It is all a part of the procedure. Successful traders are successful for a reason other than the fact that they constantly win. They have been successful as a result of their ability to handle their losses. They were more concerned with how much they could lose rather than how much they could win.
To sum it up
You should not be frightened to lose if you are fresh to this industry. Every deal is a risk in exchange for the desired benefit. Whatever set-up method or trading system you choose, there will be a point when your expectations of winning do not align with reality. And that’s perfectly acceptable. If you lose, take what you have learned and move on. Also, keep an eye out for a more profitable trade.
Most novice crypto traders deal with their fear of losing in trading by seeking assistance from professional crypto traders. They go to trading platforms where they can connect to the best brokers in the industry. An example of this is Immediate Edge. Immediate Edge was successful in developing and releasing its platform to the general public. They want to see Bitcoin become ubiquitous in everyone’s homes throughout the world. It is the go-to platform for newcomers who wish to test the waters first. It’s ideal for individuals who are hesitant to jump into the realm of bitcoin right away.
Most probably, the best way to eliminate the fear of losing in crypto trading is through finding comfort in its generality. A lot of beginner traders feel the same way. But the successful ones are those who have already conditioned their mind that losing sometimes is inevitable. Yes. Trading has numerous benefits, but it also comes with the danger of losing some or all of your money. Thus, new investors should consider these possibilities.