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The biggest reasons for the failure of traders are: The use of very high levers is usually due to high confidence in the result of an analysis. The problem with this approach is the sharp fluctuations in your capital and nervous balance.

Non-use of stop-loss (stop loss); Never forget to use stop loss or stop loss in your trades.

At the beginning of the transaction, every currency you enter in your trade is important. You need to follow strict capital management strategies to protect your assets.

Undisciplined and irresponsible work is a common cycle in which novice traders fall and cause them to fail, like entering a trading position without studying and rushing.

Trading can be challenging and risky for anyone. However, trading in digital currency, futures, and margin markets can be even more dangerous due to the sharp fluctuations in these markets.

To invest safely in cryptocurrencies, traders need to know how to manage their risk and avoid costly mistakes that hurt their capital. Therefore, understanding the common mistakes that cause traders to fail is essential so that you can avoid them and become a successful trader.

Use the upper levers.

One of the most common reasons traders fail is to use high leverage. The use of very high levers is usually due to high confidence in the result of an analysis. The problem with this approach is the sharp fluctuations in your capital and nervous balance.

Using the above leverage can have two consequences for traders. The most hopeful outcome is to have a successful transaction that leads to your significant profit. However, if your position does not go as you wish, it can cause you huge losses.

Given that trading in digital currencies is extremely volatile and unpredictable, it is more likely that you will incur a loss as large as the profit you expect. In addition, if the market is very volatile, this loss can destroy the real assets (Liquidation).

Successful traders will never enter into trades beyond their reach or even beyond their trading strategy. Thus, novice traders should focus as much as possible on retaining core capital and looking for small but consistent wins, which increase their profit and capital percentage over time. Combined profits as a whole are very important as a strategy. Small but steady profits and growth allow traders to secure their long-term investment for profitability.

Poor risk management

Another reason traders fail is poor risk management. Risk management strategies should have a clear plan for each amount of loss. All exchanges, such as Bainance, etc., offer various trading tools such as stop-loss, which minimize the losses of a transaction. The loss limit allows traders to automatically exit their position and protect their capital from further losses if the trade does not perform as expected.

When traders do not use the trading tools that help and protect them, they expose their capital to unnecessary risks. Tools such as the loss limit help traders protect their funds when the user is active and when the user is not active, and the market continues to operate as usual. Let’s give an example of how important a loss limit can be. Suppose Bitcoin falls more than 10 percent overnight, causing a huge loss on your capital that you could not naturally prevent because it was so far from the market. As a result, your entire investment is completely lost, but you can generally avoid it. Therefore, protecting your funds with all available tools and minimizing the risk of losses for all traders is an essential point that should always be considered.

Enter large and risky positions

Novice traders often fall prey to the idea of ​​”either take everything together or go home” and spend most of their capital on one trade and position. This is ruthless and dangerous, but it has completely misled logic. Every dollar you enter into the transaction is vital when you start. Therefore, you must follow strict money management rules to protect your capital. The most successful traders follow the same rules and restrictions in their trades.

A transaction with the risk of losing 10% of the actual money is considered a very risky business for most professional traders. For example, if you have $ 1,000 per transaction, 10% of the entry will equal $ 100, and you will lose $ 100 (excluding fees and financing costs) and only ten other transactions. You can do this with a strategy before your budget runs out. Instead, it’s wiser to trade at 1 percent or even less of your capital. You can learn how the market works and gain completely new experiences without losing your capital. The more you win in trades, the more money you will eventually have for your next trades. At that time, you may be trading with more capital, but the percentage of your budget will remain the same, and you will become an experienced trader.

Transaction without responsibility

Psychology and emotions have a big impact on how traders work. Undisciplined and irresponsible work is a common cycle in which novice traders fall and cause them to fail, like entering a trading position without studying and rushing. Likewise, sudden and long-term gambling transactions will waste your capital. When traders are faced with several unsuccessful trades, it can be challenging for them to get out of this situation. In this situation, sometimes, the best trade is not to trade.

For example, it is interesting to note that Binance has developed a mechanism to help traders avoid this behavior called the Cooling Off Period. This disables futures trading for the trader for some time.

Another form of irresponsible trading occurs when novice traders do not properly understand the products they are trading. In other words, they are trading blindly. Taking the time to familiarize yourself with the products you trade and the basics behind them will give you a better competitive advantage and help you have more and better control over your decisions.

Last recommendation

Traders often fail because they do not take trading and trading seriously enough. Most inexperienced traders look for quick ways to get rich and do not know how to deal with the market seriously. Some traders see this as a costly game. Some traders are just gambling without even realizing it. On the other hand, successful traders are not gamblers. They take responsibility for their actions. Transactions must be well planned and thoughtful. If you want to make a continuous profit, you have to trade responsibly.