According to Investopedia, a profit and loss statement (P&L) is a financial statement that outlines revenue, costs, and spending for a specific period, usually a quarter or fiscal year. It is, of course, must be kept private, but some choose to broadcast it.
Are you wondering why in trading groups or social media, the only thing you see traders post are their wins? In reality, they also have failed trades, but they do not post them on social media. Why? Because when you win your trade, people will think you are a genius. But when you lose your trade and post it on social media, they will think you are not that successful. Unfortunately, that is the reality. Let us investigate the best way a crypto trader could deal with profits and losses in this thorough guide.
Selecting a Crypto exchange
Choosing a reliable platform like Bitcoin Motion helps you lessen profit loss due to scammers and hackers in the online world. Plus, not worrying about security issues gives you the chance to focus on your strategy and techniques. There have been plenty of cases of newbie crypto investors that put an end to their careers right after it started due to believing alluring promises from fraud companies; doing extensive research and background check about a platform decreases this risk.
Most of the people on social media are judgmental. For this reason, some become so insecure about their profit and loss history. It seems like there is pressure coming from society, so we cannot blame those traders who only post win-trades.
When we were in school, did you notice that the one who always receives attention is the student who always does the right thing? In contrast, those who often make mistakes are ignored and reprimanded. This kind of experience can shape the mindset of an individual. As a result, they always try not to commit mistakes as people around them tend to criticise them. Some carried this mindset up to the present. That is why in trading, some find it difficult to accept defeat. The mantra is like: we should not accept defeat; we should always be winners. Psychologists call it Ludo phobia. A presentation by Trevin Stalberger in Prezi defines it as the fear of making mistakes or losing any kind of game.
Dealing with profits and losses
We should try our best to avoid this concept manifest in our trading activities. It is a big NO. Many fail in trading because they cannot break free from the stigma. Remember that not failing is against our nature. We, humans, tend to flop, and we learn from these mistakes. In trading, the approach is way different from what we are used to. Here, losing is normal. Not all trades you make always win. That is how it is. So, if you dwell too much on your profit and loss, you will not last long in the crypto industry.
Why? Because it appears that you already have a quota and need to boost your profits and losses. When you lose, you tend to recoup as soon as possible because your P&L suffers. And because of this, you sort of revenge trading. You think irrationally. You increase your leverage and position size just to make up for it even though it is against your trading plan. In these times, some traders choose to seek assistance from professional crypto traders to get back on their track.
If you focus on profit and loss, what you are exercising is your EGO. You are not trading right anymore because you can no longer think straight. It is necessary to monitor P&L. Because, with this, you can see if you have made progress. However, your profit and loss history is not everything.
The important thing is you follow your trading plan, you trade right, and money will follow. You just focus on P&L; otherwise, consequences may arise. For instance, other traders do not close their position immediately even if it is against their trading plan as they are very concerned about their P&L.
Some claim an 80%-win rate, but the problem is, profit is almost nonexistent. This situation happens because traders’ mindset does not match their trading plan. If you have been trading for quite some time, you will still be able to relate to it, but if you are a new one, you will probably experience it in the future. It is just simple advice to increase your chances of succeeding in crypto. What we should focus on is following our trading plan. Keep trading, and always stay in your crypto trading game. When consistently liquidating, we remind ourselves that our remaining money is not enough and will soon deplete. It creates panic. You will no longer be in the game, and your progress will slow down. Eliminate this practice before you even step on the stage of professional crypto traders.