How Are Cryptocurrency Investors Losing All Their Money?

Cryptocurrency markets, which have been on everyone’s lips lately, huge gains and huge losses a medium. Those who invest based on hearsay or have sufficient without knowledge Individuals who start trading unfortunately end up losing huge amounts of money.

This situation has been quite intense in the last few days. the disturbing news caused it to be served. One of them, “CryptoNerdA user named depressed It was shared that a Turkish doctor committed suicide.

Stay away from leveraged transactions!

The main reason why people make a lot of money in the cryptocurrency markets and lose the same amount is, leveraged transactions. Let’s simply explain what this is. This transaction type, which is available in almost every cryptocurrency exchange, With more money than you have It allows you to take a position. So you are actually trading with money you don’t have. Profit and loss in leveraged transactions compared to spot transactions It’s quite risky.

Opening transactions for very high amounts in a leveraged transaction it becomes possible. We can talk about such an account. Let’s say you have 100 dollars. If you set 10x leverage $1,000 You can open a transaction. However, there is a point here. In a leveraged transaction, your probability of profit or loss increases depending on the size of the leverage you open. So opening a 10x trade becomes much riskier than opening a 2x trade.

Let’s see what Crypto Nerd went through after losing around $1 million recently. This friend PEPE He opened a 3x leveraged transaction in the cryptocurrency named and lost all his money. The reason why such an event happened is because Crypto Nerd It was because he didn’t have enough collateral.. If Crypto Nerd had made a correct calculation, made the transaction a little smaller and put collateral equal to the amount he opened the transaction, such a thing would not have happened.

There are a few important points that come into play here. One of them, liquidation level. The algorithms of the exchanges determine a liquidity level according to the amount in the wallet and the transaction opened. This level reveals when the transaction will be liquidated. Here, the correct calculation can even ensure that the liquidation level drops to 0. However, those who do not do this, random usersUnfortunately, they are experiencing great losses.

Let’s give an example for leveraged transactions:

Let’s say you have $100 in your futures wallet. “Webtekno CoinLet’s imagine that we will open a transaction with 10x leverage on an imaginary crypto asset named “. Let’s say the price of Webtekno Coin is 1,000 dollars. Normally, we can trade 0.1 Webtekno Coin. However, 10x leverage Our money becomes 1,000 dollars. In other words, we make a transaction for 1 Webtekno Coin. Let’s assume that the transaction we will make is bullish.

After opening the transaction, the important thing is; our profit and loss ratio, based on total transaction size is calculated. Let’s say Webtekno Coin lost 10 percent of its value from $ 1,000 and fell to $ 900. Our $100 principal then drops to zero and 100 percent damage he would have written. This is exactly why people lose so much money in the cryptocurrency markets.

There is no such risk in spot transactions!

If you invest your money in spot transactions instead of wasting it in leveraged transactions You will be protected from such risks. If you buy Webtekno Coin for $ 100, a 10 percent loss in value will cause you to lose at this rate. Because you do not have a situation like borrowing from the market. On cryptocurrency exchanges spot transactionsYou can compare it to buying dollars or euros with TL.

It’s about what you will and won’t do. yours your decision. However, if you want some advice from us, you should definitely avoid leveraged transactions without fully understanding the system. stay away. Yes, you can make quick profits in leveraged transactions. However, keep in mind that you may experience the opposite situation. All your money, at the slightest fluctuation steam it could be.