When entering the world of cryptocurrency, many beginners are lured by the promise of quick riches and the allure of leverage trading. While leverage trading offers the potential for higher gains, it is equally fraught with risks that can wipe out your investment in an instant. If you’re new to crypto, avoiding leverage could save you from unnecessary losses and frustration.

My Journey Through the Crypto Market

I started my crypto journey back in 2017/18 with high hopes. Like many others, I fell into the trap of buying the top, driven by greed and influenced by hype. That decision cost me dearly.

In 2020, I managed to make some decent profits by sticking to simple spot trading. However, greed crept back in, and in 2021, I ventured into leverage trading. Without understanding the risks fully, I lost everything I had earned.

The Hard Lessons of Leverage

Leverage trading is essentially borrowing funds to amplify your positions. While this can increase profits, it also magnifies losses. The crypto market is highly volatile—20% dips are not uncommon. For an over-leveraged position, such moves can liquidate your holdings in moments.

By 2022, I decided to change my approach. I began accumulating coins on spot and avoided leverage altogether. This strategy allowed me to sit back and observe the market without panic during volatile periods.

Today, I occasionally trade with leverage, but only for fun and always with stop-loss orders in place. Even then, I accept that I have an 80% chance of losing.

Why Leverage Is Dangerous for Beginners

1. Lack of Experience: Beginners often don’t understand how leverage works or how quickly losses can compound.

2. Emotional Trading: Leverage amplifies emotions, leading to impulsive decisions and greater losses.

3. Market Volatility: The crypto market’s inherent volatility makes leveraged positions extremely risky.

4. Overconfidence: Early successes in leverage trading can create a false sense of security, leading to bigger, riskier bets.

The Right Approach for Beginners

• Stick to spot trading and invest only what you can afford to lose.

• Focus on accumulating coins and hold for the long term.

• Learn to ride out market dips instead of panicking.

• Avoid falling for influencer hype—most don’t have your best interests at heart.

• Remember that crypto is a game of patience, not greed.

Conclusion

Leverage trading might seem like a shortcut to wealth, but for beginners, it’s often a fast track to losses. True success in crypto comes from patience, strategy, and discipline. Invest in your education, build a solid portfolio, and treat crypto as a long-term journey.

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