It happens that every time you trade Bitcoin, the trade goes against you. Is the market conspiring against you? Is someone sabotaging the market? The market is volatile – you know that. But it cannot be so volatile that you cannot control it – at least for a bit. Unless, of course, you do not understand how the market works.
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I always write my script before recording it. All my videos have their transcripts in the description. Here is the transcription of this video:
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Why Bitcoin Falls right after you buy it?
It happens that every time you trade Bitcoin, the trade goes against you. Not every time. Sometimes you win. When you do, you begin to believe you understand the market and have a strategy that works.
Then it happens again. You lose. You continue losing until you have no money left to make a trade. Is the market conspiring against you? Is someone sabotaging the market? The market is volatile – you know that. But it cannot be so volatile that you cannot control it – at least for a bit. Losing money is a failure and you take that failure personally.
You need to stop and reflect, instead of carrying on in the same dangerous path, disregarding the logic behind trading. You wanted to bring money into your account instead of giving it away.
Trading is an art as well as a science. It is an art because it needs a vision to grow your money, and a science because you need to follow specific steps to actualize that vision. You can trade Bitcoin the whole day, but you will not make any money if making money is mathematically impossible following your strategy.
Say Bitcoin is trading at 70,000 dollars and you want to take a position. You buy Bitcoin and go to bed thinking it will rise to 75,000 dollars the next morning. You will make a profit of 5,000 dollars. That is an excellent 6.66% return on your investment in just one trade. Such an expectation is valid because Bitcoin has been growing really fast lately and everyone is making money.
When you wake up, Bitcoin is trading at 62,000 dollars. Then, before your eyes, it starts falling through 60,000 dollars, which you thought was impossible.
Let us analyze this situation for a moment.
First, you bought Bitcoin when sellers started selling them to close their profits. There is time for entry and time for exit. You entered the market actually when you should have exited it. You cannot own the market. But you can try to understand how it works.
Secondly, you bought Bitcoin not because the market offered you an opportunity to trade. You traded it because you wanted to trade. Making money depends on the market. Losing money depends on you. It is your money. You have to decide whether you will lose it or not. You did not have any technical confirmation for this trade. Everyone is making money so you can make it too is the worst confirmation of all.
Third, you traded Bitcoin without deciding at what price point you would exit the trade accepting your loss. You may be an ambitious trader, but always expect the market to go against you. That will help you manage risks efficiently by keeping your losers small and letting your winners run for bigger profits.
Fourth, and most importantly, you have some contradictions within yourself. It looks like you wanted to make quick money overnight; thus you are a trader, not an investor. But since you are holding a losing position, you do not appear to be a trader. Traders exit their position with a loss. Maybe you cannot be so ruthless as a trader to cut their losses. Maybe you should be an investor instead, who takes a long-term view of the market. If you hold your Bitocin position, the market may return to your expected 75,000 dollars one day. But you may lose even more money by doing that.
Bitcoin, or any asset, does not fall in value right after you buy it. It happens that you, the trader, are not aware of the market condition the asset is trading. Asset prices fall because of the continuous power struggle between buyers and sellers, between supply and demand. You need to understand where the supply is low and demand is high. You buy when the demand is high and sell when the supply is high.
Then you make money.
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"promosm" 🤷