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What causes crypto trading losses? Leverage trading, FOMO or lack of knowledge

2 points by ashish1521 ↗ HN
It could be same as stock trading, but I have seen a pattern among crypto enthusiasts, following others in fear of missing out and since Bitcoin and other coins are too volatile sometimes, many people lose huge amounts. Thoughts?

2 comments

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vzcx
All trading losses can be explained as losing traders not understanding and properly accounting for the risk of their strategy.

It is a safe bet that most retail traders are not at all systematic in their trading or use poor systems, which are moral equivalents in this world.

A good trader looks for arbitrage opportunities, or failing to find any, takes calculated risks.

In bubbling markets, FOMO makes people risk-seeking as opposed to risk neutral. They overpay for risk, the volatility becomes a selling point. The bet works out for some, but most will be burned. It is basic statistics.

ashish1521
yes, absolutely spot on. Another thing which I have witnessed is the top youtube crypto leaders sharing important insights, but many times the prediction goes sideways and a lot of people loose tons of money.