Nowadays, practically at every turn of Nigeria, you can hear people talk about crypto. The young men on the campuses, office employees, even women in the market know about Bitcoin, Ethereum, and other coins. To most of us, crypto seems like a golden opportunity to get out of poverty, make quick money or have a better life. I recall the time I started reading about those people who got rich due to crypto; it appeared to be magic. However, once I got into experimenting with trading, I found that, in fact, most people make less money in crypto. Research even reports that approximately 90 percent of traders fail. It is quite a high number and the question is: why does this occur?
Lack of knowledge is one of the largest causes. Most traders plunge in without even learning the ropes of trading. I was also guilty of this. I have downloaded an exchange application, purchased a coin, which was on the ascent and hoped it would escalate. At times it rose and at times went down. I had no proper strategy. Many Nigerians act on hearsay or the mere word of a friend rather than knowing how to read market charts, candlesticks, support and resistance or risk management. Trading becomes gambling without the knowledge. And in gambling the house wins.
Greed is another cause of losses by numerous traders. Crypto can move very fast. A coin of N10 today can skip to N30 to-morrow. This leaves a lot of traders aspiring to make millions overnight. They have to keep and hold on to them, hoping that more will come than they are getting in small, steady profits. In the end the coin crashes and they lose it all. This has occurred with hype coins such as Shiba Inu or Doge. When the price was high making people buy, they experienced a lot of excitement and their money went to waste. Greed is a sight killer and once you get greedy in crypto, you are no longer safe.
Fear also plays a big role. It is referred to as emotional trading. Most individuals sell before they are scared of losing or they purchase too late when they are afraid to miss. I recall I had once seen a coin go up. I jumped up and made the purchase without even considering it, and then as soon as I made a purchase the price decreased. I sold off soon in panic and then it went up again. This form of emotional trading causes you to lose money since you are not operating on a clear plan. Fear and greed are twin-like brothers that ruin traders.
The other reason is a bad risk management. Not all trades will make it in crypto. Even the most skilled traders win at times. However, it is the way they deal with risk that makes them different to losers. Majority of traders are invested in a single coin. They are finished when it falls. Others even borrow to trade hoping to recover it with interest. When the market becomes unfavorable they find themselves in debts. Effective traders will not risk the majority of their money in a single trade but will always take provision of stop-loss to shield them. Most beginners are saddened by this.
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Lack of patience is also a leading cause of losses incurred by many traders. They want quick results. They hop, skip, and flip between coins, seeking quick profits rather than being able to concentrate on long-term expansion and hone a single trading approach. Cryptocurrency trading is not a short-term event, it is rather a marathon. It must be disciplined and time consuming. But the biggest majority of the youths would like to increase their money by at least a hundred percent within a week. I myself at one time opened five different trades in one day without evident causes. I just lost out at the end more than I gained. Impatience is a grave that you are digging your own in crypto.
The other issue is that others do not have knowledge of market manipulation. The fact is that in crypto, there are big players known as whales who navigate substantial sums of money. They are in a position to push the price high or low in a manner that entraps small traders. As an illustration, they may over-pump the price to get people enthusiastic and join, only to dump the coins at other people's expenses. This is not something that most small traders anticipate since they merely listen to the noise of the social media. When people do not realize that the market is in the hands of larger players, many people get into traps.
Moreover, a significant number of traders lose due to giving too much attention to other signals. Others enter into Telegram or WhatsApp groups that have so-called experts providing buy and sell advice. These signals are effective sometimes and in most cases they are not. The depressing thing is that not all these groups are genuine as there are groups of scams and the scans are using the followers to make the bags of the scams heavy. A trader that relies solely on signals without educating himself on how to interpret the market will end up losing money. I have been part of such a group and nearly all calls were lost. That is when I understood I have to study alone.
It is the fact that crypto trading is not simple. It appears easy to the outside, but it requires serious learning, discipline, and practice in order to succeed. Amongst a thousand traders, nine make losses as they do not follow the fundamentals. They do not study the market, they give emotions the reign, they make excessive risk, they are greedy, and they do not spend their money wisely. The trader who manages to succeed is often the trader that takes time to develop the skill, tolerates low profits, can handle losses and remain patient.
Considering my personal experience, I can state that the lessons are clear. I previously lost money and I cannot say it is a pleasant experience. However, I also learned that trading is not a part of quick cash chasing. It is protection of your capital, little by little, long term thinking. Crypto is mighty, and it possesses opportunities but when you are reckless, it will humble you.
4.225 SRY