4 Real Reasons for Losses in the Market

If you remove emotions and look deeper, it turns out that the main enemies of a trader are misunderstandings. Fear and greed appear only when the trader does not understand the market. We wrote in more detail about this in the article “Fear and Greed Are Just Symptoms. Where Does the Real Risk Hide?”. The real reasons for losses lie in ignorance and the lack of a systematic approach.

1. Lack of Understanding of Market Processes

The market moves exclusively due to supply and demand.

• If demand prevails — the price goes up.
• If supply prevails — the price goes down.

But most traders do not see this, because they look only at the candlestick chart. On it, you cannot see either the volume of money with which buyers and sellers push the price, or the accumulation of positions by large market participants, or the orders in the order book. We discussed in detail how to determine deficit or surplus in a separate material.

Such an approach has nothing to do with analysis and understanding of market mechanics.

2. Lack of Understanding of Analytical Tools

Most market participants limit themselves to Smart Money and technical analysis. Candlestick patterns, indicators, and oscillators only interpret past price movement but do not show the mechanics of the market.

As statistics show, 95% of people in the cryptocurrency market look exclusively at the candlestick chart, where you cannot see the formation of deficit and surplus.

What exactly is not visible?

• Liquidity concentration zones. They must be observed on cluster charts.
• Where large buyers and sellers are located. The volumes of major participants can be seen by analyzing the order book — through heat maps, BAS.
• The difference between aggressive market buys and sells — the delta. It can be evaluated either on the dashboard (delta/balance chart) or directly on the cluster chart.

Without these tools, the trader sees only the surface. He tries to trade without understanding who really controls the movement — the buyer or the seller. And we explained in more detail which tools are best to use in the article “RTT: The Main Tool for Analytics and Cryptocurrency Trading.”

Errors in analysis lead to emotional decisions. When the trader does not see the real picture, he starts guessing and panicking.

3. Lack of Understanding of Execution Tools
Even if the idea is correct, it can be ruined at the execution stage. Most traders have no systematic understanding of how to work with execution tools.

Mistakes appear in two points:

• Leverage. Beginners set it to the maximum and enter with the entire deposit. The slightest movement against them — and the deposit is liquidated.
• Orders. Stop-losses are placed chaotically. As a result, the price makes a natural pullback, knocks out the trader’s stop, and then goes exactly in the predicted direction.

Even a good trading idea turns into a loss if the trader does not know how to properly use leverage, calculate stop orders, and manage the position.

4. Lack of Understanding of Implementation Methods

This is the deepest reason for losses. Trading without a written strategy is chaos. And this is exactly what kills deposits most often. Most market participants skip the stage of analysis and validation and immediately move on to implementation. As a result, they turn into long-term investors or get liquidated.

How does this look in practice? The trader has a trigger (news, someone’s recommendation, price impulse). He skips the analysis stage and immediately opens a trade.

When there is no strategy, there is no prescribed algorithm: where to enter, how to validate the signal, where to fix the result. Most traders’ sequence of actions consists of these steps:
trigger → implementation → hope.

As a result, a trader who works not according to a strategy but according to emotions loses in the market. Therefore, trading without a strategy is the main fatal mistake.
But in reality, the sequence of actions of a trader or investor should consist of 6 stages:
trigger → analysis → validation → implementation → management → fixation.

Fear and greed are not enemies but indicators that the trader has no understanding of the market and how to manage trades and investments.

And if you want to achieve discipline and understand where you really need to start your path in cryptocurrency trading in order not to trade on emotions — read the continuation in the article “3 Steps to the Right Start in the Crypto Market.”

Conclusion

The main reasons for losses in the market are not emotions but misunderstanding. When a trader sees only the surface in the form of a candlestick chart and does not use tools for analyzing supply and demand, he finds himself in the position of guessing. Errors in managing orders and leverage only intensify the chaos. And the absence of a strategy turns trading into a set of random actions.

Understanding market processes, competent use of analytical and execution tools, as well as working according to a clear strategy — this is the foundation on which profitable trading is built. Emotions in this case no longer become enemies but hints: if fear or greed appears, it means that somewhere the algorithm has been broken and it is necessary to return to a systematic approach.

Follow new insights in our telegram channel.

No need to invent complex schemes and look for the "grail". Use the Resonance platform tools.

Register via the link — get a bonus and start earning:
OKX | BingX.

Promo code TOPBLOG gives you a 10% discount on any Resonance tariff plan.