Whether you are a newcomer to the crypto market who mistakenly invested a large amount into the wrong coin, or a professional that made a well-researched decision and something still went wrong, the result it the same — you lost your money to the crypto market. This is a big problem, but also a problem that every crypto trader faces at some point.
The reason may be anything, from simple bad luck to the lack of research. Add to that the fact that the crypto market continues to be extremely volatile, and it is clear that not all of your trades are going to end up successfully.
Whatever the reason is, the fact remains that you experienced a loss and that this is a problem which can affect more than your funds. It can also affect your mind and feelings. Since every successful trade that you have the potential to make in the future depends on you, you have to recover first, and only then should you worry about the funds.
The road to recovery is different for everyone, and it will take a different amount of time and effort. However, there are a few general steps that you can take to recover from a crypto trading loss.
Step 1: Stop and calm down
You have just suffered a major loss. It may have been your mistake, or it may have been bad luck, but the result is the same. This is the time when you are the most vulnerable, as you are still in shock upon realizing the truth. The best thing you can do now is to stop your trading immediately and calm down.
This is an emotional period, and it is important to handle your emotions, take a deep breath, relax, and regain composure. The money is lost, and there is no quick fix to that right now, that much is true. However, when you are emotional, you are not thinking clearly, and you may end up making a lot more damage in an attempt to find a quick fix.
Bad trading decisions happen all the time to everyone, and everyone loses money. However, it is important to deal with it when it happens, and it all starts with distancing yourself from making new decisions right now.
Step 2: Accept your loss
Crypto trading is risky, and sometimes bad things happen. While you have probably heard stories or read confessions on forums about bad decisions that cost a pretty penny, you never expected it to happen to you. Now it did. Even if the loss is big, you need to remember that it happens and that you sometimes win and sometimes lose. However, you can still recover the lost funds in the future, but to do so, you first need to accept what happened.
Step 3: Distance yourself from the market
This is probably not what you want to do now, as you are in a hurry to recover the loss as soon as possible. However, this is a necessary step that will allow you to calm down and think things through. You can return to trading whenever you feel confident enough to do so, but after experiencing a large loss, the best thing you can do is take a little break.
It does not have to be long, maybe only a few days. However, it is necessary, as it will allow you the precious time needed for dealing with your emotions and stress. Once you start feeling up to it again, you can approach the market with a cool head, which will increase your chances of avoiding similar mistakes in the future.
Step 4: Find out what went wrong
This step may be crucial for avoiding similar errors, which can cost a lot if you trade with greater amounts. Take notes on what you did, how you felt about it, whether you were confident or the decision was risky. Trading journals are a very useful tool for any crypto investor, as they force you to become aware of your feelings as you are writing them down. Doing so will help you sharpen your senses and help you grow as a crypto trader.
Next, make sure to identify what exactly went wrong. It is also important to note that you should never trade more than what you can afford to lose. If you already knew this but you did it anyway and it resulted in a loss, use this unfortunate situation as a reminder to never do it again. The profits are nice, but doing it safely is always the smartest decision, as not all trades go the way we want them.
Step 5: Do your own research
Many traders and investors often make a similar mistake of doing what others are doing. This is a bad habit in general, but it can be especially damaging in the crypto market. Just because someone invested in some coin or decided to make a certain trading decision at a certain time and it worked for them, it does not necessarily mean that it will work for everyone else in the same way.
Instead of following the crowd, do your own research, document it, and make your own estimates of what is the best move to make. Even a slight shift in the market can sometimes lead to different results, and crypto trading is especially infamous for being highly volatile.
Step 6: Do not give up
The fact that you had a bad experience should not discourage you from continuing to trade in the future. The crypto market is a tricky one, but it can still allow you to make considerable profits if you trade carefully and think your trading decisions through. Sometimes you will have a bad day, and sometimes you will earn huge amounts. This is how the market breathes, and this is how trading ends up being for most traders.
Do not lose your faith in crypto or your trading abilities. Instead, research more, keep learning and exploring, and you will be back there, making calculated decisions in no time.
Step 7: Start trading again
After you manage to collect your thoughts, calm your emotions, figure out what you did wrong, and learn what you should have done — you will be ready to return to trading once more. The entire experience, albeit a bad one, will allow you to start anew and make your future decisions more cautiously.
Your future losses will not be as bad, while your gains will become more frequent. In the end, the loss you just experienced may allow you to reach the next level of trading. It is normal to be scared and uncertain at this point, and it is perfectly fine to start small once again. Over time, you will gain more confidence, and as long as you remember not to be too reckless — you will eventually sharpen your skills and become a professional.
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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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Hong Kong, Hong Kong, 25th January, 2021, // ChainWire //
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Hong Kong, Hong Kong, 24th December, 2020, // ChainWire //
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