6 hard truths about crypto day trading

You’ve seen crypto traders flaunt their expensive lifestyles on social media, right? It may surprise you to know that the truth about crypto day trading is far from the idea such sights give you. If you want to be a crypto day trader, then there are some hard truths you need to be aware of.

1. Crypto Day Trading does not guarantee a monthly income

Even the best traders are not guaranteed profits. The market is unpredictable, and the best thing you can do is make sure you’re using a strategy that you’ve backtested or traded on paper to make sure it works.

A typical day trading result combines profits and losses, which are added together to give the final result, which may be higher or lower than the original margin.

You are almost certain to get your salary at a pre-defined time when you have a job. But when you trade on the day, you are always uncertain when the profit will come. Remember that there will be weeks when you don’t earn anything.

2. You can lose your entire profit or account with a small mistake

Due to the high market volatility, a minor mistake like a miscalculation can wipe out your profit.

Mistakes such as entering a larger position size than you intended to use, not placing stop-losses and take-profits correctly, making a mistake regarding the direction you want to execute trades, and many more can set you back many months or even with delete your trading balance.

3. A significant amount of money is needed to generate significant income

Consistently making profits through day trading requires significant investment. Having a large amount of money as initial margin allows you to invest more, which significantly increases your chances of profit.

You will struggle to make a living with a $100 account. You need thousands of dollars to be a full time trader or make a living through crypto trading.

Although it is possible to start crypto trading with a small amount of money, traders who want to earn huge amounts must consistently build their trading balance to a large amount or deposit the large sum on their exchanges.

4. You will lose money no matter how good you are

Losing is part of the game. No matter how experienced or how well you master a strategy, you will lose money. Not accepting this fact early enough can make you feel like you have a bad strategy or feel bad every time you lose a trade.

The crypto market experiences short-term price fluctuations, which makes it difficult to predict the direction of the market. Even when you predict the direction correctly, you can still lose for various reasons, such as a rapid price increase that reaches your stop loss before the trade continues in the direction you predicted or for other reasons.

Even the most experienced traders lose trades; some even lose more times than they win, which does not necessarily mean that they are not profitable. Some other factors, such as their risk management techniques and risk-to-reward ratio, also determine their overall profits.

5. Trading is different from many other ways of making money

When you trade during the day, you do not necessarily work actively as you would in a normal workplace. Your typical day might require you to perform analysis, then patiently wait for the setup to form. You can wait for a setup all day without doing anything else.

Waiting for the setup to form doesn’t necessarily mean you can be free all day. You need to monitor crypto charts closely to avoid missing the trading advantage when it forms. Doing this requires you to stick to your screen or watch it at specific intervals, such as after the end of every 15-minute candlestick.

Another way day trading is different is that you are constantly trying to avoid losses. Unfortunately, losses are a part of the trading process and traders must accept these losses. Of course, ordinary companies do not want to lose money, but that will not be the sole focus of the company.

6. Most day traders give up in the first year

Day trading is challenging, and most day traders give up in the first year. One of the main reasons for this is that they have unrealistic expectations because they think they will make money quickly and easily. When such expectations are not met, they give up, and many even lose their money in the process.

Another reason traders give up in the first year is that many approach trading without adequate knowledge. Successful day trading requires considerable experience and knowledge that you must acquire through practice. However, many aspiring traders ignore learning and aim to make quick profits.

Factors such as not managing emotions and trading psychology well and insufficient capital are also common reasons why traders give up early.

Don’t rush into day trading

We have outlined some harsh realities you must understand and accept today with successful trading. While it is possible to make money through crypto day trading, you must approach the endeavor with a realistic mindset and continue to learn from your mistakes.

Day trading can be very profitable, but it can also be your worst nightmare if you don’t understand how it works before you get involved – it’s not an easy way to make money. Take the time to learn how it works and the factors that affect the market’s price movement.