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How to deal with capital losses

How To Deal With Capital Losses

There can be many situations in the investment world where investors can lose capital in the blink of an eye. We know that any investment is a venture, yet dealing with losses can take time and patience. However, we think it’s important to see it as a lesson instead of a failure.

 

The market’s speculation, technology lapses, traders’ lack of discipline, or cyber-attacks such as scams or crypto robberies can influence capital losses. 

That’s why we have prepared suggestions on overcoming such situations and getting ready for the next round.

 

Take a break and think about it

The market comes with its volatility. The importance of getting prepared to cope is a must for traders. Dealing with that volatility is a task we carry within ourselves every day. 

A revenge trading situation is when traders increase their capital risk trying to make up a loss of capital, leading to even more losses. It is the best example of why traders should control their emotions while exposed to the market. 

If you are a beginner trader, we suggest you take a break from your next trade after losing your capital. During that break, you can slow down, remain calm, control your impulses to find the mistake and its causes, and finally learn from it. 

Remember that trying to recover in a rush is not the solution; making emotional trades brings to the worst results. 

Experimented traders often don’t regret losses nor celebrate wins because they have learned to manage their emotions when facing the market. 

 

Dealing with your skills and emotions together

Usually, traders have to deal with two issues after a capital loss. The first one is grappling with technical problems, and the second, overcoming their emotions in the process.

Technical issues depend on the operations’ course, such as situational performance, trading slumps, or the sudden drop in an asset’s price.

Emotional issues can come from lack of discipline, mental fatigue, unwillingness to follow a trading plan, or a low-risk tolerance level.

Firstly, we suggest to create and follow your trading plan strictly because it is your guide to getting a balanced trading performance.  

Secondly, keep in mind that losses are part of the path to success. Recognize the mistakes, revise them in your trading plan, and find the solution to avoid repeating them.

 

Go for one day at a time

Accepting the responsibility for the loss is the first step to take it easy. Think about it as an opportunity to learn instead of a never-ending problem. Keeping the faith in your trading skills is the second step. Don´t blame yourself because a lost trade doesn’t mean you made a mistake. It is part of the trading process. 

Not following the crowd is the third step. Remember that each trader made their trading plan according to their own goals, skills, and market research. That´s why copying or following other traders’ strategies is useless for you. Prepare your action plan based on your research and goals. 

 

Recovering capital loss to a scam

Falling to crypto scams is not an uncommon experience. According to a report from blockchain forensics company CipherTrace cryptocurrency crimes, last year totaled up to $4.52 billion.

Some companies like Coinfirm offer a service for anyone who has fallen to crypto-related scams. Victims can fill extensive forms of information, after which Coinfirm would track the funds sent to the scammers and, by collaborating with exchanges, freeze those funds and deliver them back to victims. 

Keep in mind that recovering lost cryptocurrencies is very hard, virtually impossible. It happens only when the perpetrator leaves a trail that allows ID him. Even then, there are no guarantees.

Bankomia would like to remind you to keep your capital safe with trusted 3rd parties or in cold storage wallets.

 

Final words

The market offers many opportunities, and it’s for you to decide how to perceive a capital loss. You have two choices to make; you can either give up or overcome the market challenges.

Consider developing healthy psychological, theoretical, and practical skills to get over losses in the crypto market’s uncontrollable environment. 

Collecting theoretical tools, practicing your skills in a demo account, and following your trading plan will keep your mind prepared for a loss.

– Read 5 steps to enter the crypto world without feeling insecure published on our Bankomia blog, to get in touch with this topic –

 

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How to deal with capital losses

How To Deal With Capital Losses

There can be many situations in the investment world where investors can lose capital in the blink of an eye. We know that any investment is a venture, yet dealing with losses can take time and patience. However, we think it’s important to see it as a lesson instead of a failure.