Why Most Crypto Day Traders Fail

Unlike long-term investments where you buy and hold assets for several months (or even years) before selling them for a profit, day trading involves frequently placing trades, often multiple times on the same day. Intending to capture short-term price movements, day traders leverage technical analysis via different indicators and strategies.

 For that reason, the crypto market is an excellent choice for day traders due to the high volatility of the asset class, which provides great opportunities to place profitable orders.

 However, while day trading is not as complex as most people believe, around 80-90% of day traders lose money in the long run.

 While the high volatility of digital assets makes them the perfect choice for day traders, it's easy to achieve a negative ROI. Researchers have discovered that around 80% of financial market traders lose money. At first glance, this would indicate that becoming a successful day trader is a super tough job that only the minority can achieve.

 The good news is that it's certainly not the case.

 The majority of the traders lose money on trades because they lack even the most basic form of a trading plan or investment strategy that they consistently execute while placing orders for financial assets. Even when they have a decent strategy, many lack the patience to use them for more than just a few weeks. For these reasons, it's not surprising that they lose money on their trades.

And there are two key reasons behind their failure.

 First, many traders lack a decent trading system to consistently utilize to generate profits on short-term price movements. Instead of designing a strategy beforehand, which they could test and fine-tune, they jump right into placing huge orders with 100x leverage without even using a simple protective stop or profit target. As you can see, this is a super easy and quick way to lose your money.

 Also, even when they have a good strategy, traders fail to execute it properly. Instead, they let emotions, such as fear, greed, and hope, influence all their trading-related decisions. Developing a trading system is not difficult. Several different strategies can be used to generate profitable results. Traders lose money because they lack the discipline to follow the system for more than a few weeks. Successful traders can follow a specific method for several consecutive years.

But how can you avoid making the above mistakes? 

An essential attribute to becoming a successful crypto day trader develop a strategic trading plan. According to many investment surveys, 80% of all traders lose money on their trades. The majority of these traders lose money because they have no trading plan or investment strategy. If you want to become a profitable trader, develop your own system and always follow the rules.

Patience and discipline are the keys to successful crypto trading.

Many strategies can be adopted for successful trading in cryptocurrency but most day traders lack the patience and discipline to develop a strategic trading plan and utilize it for the long term. Without patience and discipline, there won't be consistency. Developing a good trading strategy is not as important as consistently following a good daily trading routine for a long time.

My suggestion is to find a good trading strategy/plan and consistently utilize it regularly for several consecutive months.

In addition to the above, you can check out this excellent article to learn about trading strategies, how to avoid making mistakes - and become successful at trading crypto.

The lead image is by Sergeitokmakov from Pixabay.