No you cannot lose money that you do not invest. The only exception to this rule is if you are trading on an exchange that offers the ability to short the market. (take a loan). May 28, · As Bitcoins rise in value, so do the prospective profits of those investing in them. However, many have warned that this is not investing, but gambling, and that if the "bubble bursts", it could. Yes, it is possible to lose money trading BTC and crypto. It is, at the same time, one of the prettiest ways to be rich or poor. First of all, trading cryptocurrencies is .
Can you lose money on bitcoin tradinginvesting - Losses when trading with bitcoins - Bitcoin Stack Exchange
What happens if you go to Newegg after they got lowered in price? Sign up to join this community. The best answers are voted up and rise to the top. What happens if I buy Bitcoins and the price goes down? Ask Question. Asked 3 years, 1 month ago. Active 2 years, 9 months ago. Viewed 50k times. What happens if I buy Bitcoins and the price goes down. Will I lose a quantity of my money? Philip Kour Philip Kour 1 1 gold badge 1 1 silver badge 3 3 bronze badges. It concerns me that people who lack such basic knowledge of economy would invest in a cryptocurrency.
Myridium OP has not stated that they have invested or is considering investing in a cryptocurrency. It's possible that they are merely asking the question in an attempt to learn. Myridium If anything, it should concern you that people who lack such basic knowledge of economics would invest in anything. It's exactly as if you bought stock and its price went down. Myridium With people everywhere calling bitcoin a ponzi scheme or pyramid scheme, it's not actually that odd of a question for a newbie.
They often don't realize it's just a simple thing you can buy and sell. Active Oldest Votes. Max Vernon Max Vernon 1, 13 13 silver badges 26 26 bronze badges. Your market view of trading any commodity stands true, but your key example is wrong.
Bitcoin has no intrinsic value , and can become worth absolutely zero. Tax law is a completely different area. Consult a tax attorney or accountant in you jurisdiction for details applicable to your scenario. Xen There is nothing fundamentally different in the intrinsic value of gold; if someone invented a machine that could fabricate gold out of thin air, your bar of gold would have zero value; if a replacement were found for all uses of gold, it would have a value very near zero.
The difference, I think, is one of risk: there is a higher risk of the bitcoin network becoming obsolete, and investments in it worthless, than all uses of gold becoming obsolete. But that's just a more extreme version of the risk of fluctuation in value. JoseAntonioDuraOlmos I disagree.
This is the correct viewpoint. This is the viewpoint that says "If I have an ounce of gold, I have an ounce of gold, no more, no less. Jestin Jestin 8, 1 1 gold badge 18 18 silver badges 32 32 bronze badges.
It goes both ways, too. If the value of fiat currency goes up in the worst case via deflation , your money is worth more even though the amount you have doesn't change. Groceries aren't a good comparison. If I buy a litre of milk, I only have a litre of milk for a week or so, regardless of what happens to the price.
David, true. Groceries lack a property of money, namely durability. DavidRicherby I think everyone with half a brain can understand the relevant points of the analogy and discard the irrelevant ones like "milk goes off". That's why it is getting a lot more attention than it probably deserves. Bitcoin's a capital asset at least conceptually; dunno about legally : A capital asset is defined to include property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession.
Until you actually sell the Bitcoins, the loss is considered unrealized : What is an 'Unrealized Loss' An unrealized loss is a loss that results from holding onto an asset after it has decreased in price, rather than selling it and realizing the loss.
Before you sell the Bitcoins, it's an unrealized capital loss. After you sell the Bitcoins, it's a realized capital loss. Nat Nat 2 2 silver badges 6 6 bronze badges. Glad to see an answer which really hits the nail. Anyone who thinks there is no loss of capital till a sale should try to use assets to back a loan, no bank is going to accept the purchase value of those assets, they won't accept "you wouldn't actually lose any money at all unless you decided to sell your gold".
The bank will valuate the assets. MaxVernon Sure, your answer's conceptually correct and did a good job answering the question. I wrote this one up to provide the technical terminology since it's useful to have the vocabulary when engaging in stuff like this. I've upvoted. Deepak Deepak 1 1 silver badge 3 3 bronze badges. A very good example is stocks which can vary for reasons which don't have to do with "objective reality" of the state of the company, but fears, hopes or expectations, rumors, commercials, propaganda et.
Literally any other market is sensitive to the same things. If you treat Crypto as a get rich quick scheme you will likely make poor unplanned decisions, lose money and chase.
Most Crypto traders have considered day trading; many have tried, some with success and some with failure. I have tried and failed and have written before about why I don't day trade Crypto. Firstly I am going to deal with lifestyle. I expect that most people who are reading this already have a job, therefore if you are going to day trade Crypto, then you are either going to do this while at work, hiding in the toilets or under your desk or you are going to be doing this in the evenings and on the weekends.
If you are doing this at work you are neglecting your job and ripping off your boss as you can't just dip in and out, it will be massively distracting. I did the same day trading tech stocks a few years back when I lost a fuck load of money. What will happen is your career will suffer, and your trading will likely be poor as you can't effectively do both. If you are doing it in the evenings and weekends, then you are potentially neglecting your family or neglecting your health and life.
Day trading is super fucking hard; you have to be glued to the markets and news, following trends and using technical analysis to make scalps. Even then, a quick change in the market can stop you out on all your investments. If you think you are smart and you can quit your job to do this, then you are taking a huge gamble if you do not have serious reserves.
Even if you are lucky enough to have made enough money and do not to need to work you are still entering a super hard market to day trade. I know of a trader this week who was stopped out of all of his investments because of the China news, where if he wasn't a day trader and held long positions on them all a bunch would have been close to recovery. Each stop was executed at a loss. As such, all those losses need winning back.
The problem with day trading is that markets can operate irrationally in the short-term, things happen which makes no fucking sense at all and you are battling the human emotions of fear and greed. The chart below perfectly demonstrates the experience the most day traders will go through at some point. We don't ever really know what the market is going to do in the short-term, so the emotions of fear and greed will cause us to buy and sell at exactly the wrong times.
You don't need to day trade Crypto. You don't need to give yourself the stress of finding coin scalps or the stress of huge losses when the market turns. While the market is highly volatile it also acts in predictable patterns. As I keep saying, investing in Crypto is speculative, what we are speculating is that the digital currencies will become forms of payment and the service based tokens will support systems and technology which will revolutionise markets.
If the speculation proves right then the investments will go up. As such, you don't need to day trade. You need to find technologies you believe in, find a good investment point and then hold your positions through the upwards waves.
I have argued with traders on Reddit over this. Margin trading is whereby you are borrowing to invest because you are using leverage. Margin trading breaks the golden rule of not investing more than you can't afford to lose, because if you could afford to lose this, then you would just make the initial 10x investment yourself.
With margin trading, you are being greedy and borrowing to invest, and you, therefore, run the risk of a margin call. Margin calls suck ass big time. From Investopedia :. A margin call is a broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.
Margin calls occur when the account value depresses to a value calculated by the broker's particular formula. An investor receives a margin call from a broker if one or more of the securities he had bought with borrowed money decreases in value past a certain point. The investor must either deposit more money in the account or sell off some of his assets.
Also, read their article about The Dreaded Margin Call. If you can't cover your losses, your trade is closed, and you lose your initial investment. We already know that Crypto investment is highly volatile and super risky. If you are margin trading, you are therefore putting your money at risk. If you are then given a margin call and can't add funds, then you lose your original investment if the price drops below a certain point. If you don't margin trade and just trade your asset as you own it, which is a 1x return, then whatever the market does you still own your asset.
Margin trading is only for the very experienced traders, and even then it is high risk. As someone who has experienced a margin call and lost a significant amount of money, I won't ever do it again. So although buying a miner and mining the currency yourself is usually a less effective way about gaining a cryptocurrency, what about cloud mining? Cloud mining is where a company already has a bunch of miners set up, in locations with cheap power, and you rent the miners off them for a set period, usually a year or two.
And when I say the two big companies, I mean these two are absolutely giants. Genesis Mining. Fees, fees, fees. So when you sign up with a cloud mining company, you need to pay essentially one to two years of fees up front. If you bought the miner directly, it would usually be under half the initial investment you pay these companies. They also earn money off fees. So why have so many people put their money with these companies?
Because people are comparing absolute results. One of the ideas I actually had was for a super transparent and fair cloud mining company. Still keen to do something like this! And these are their current fees. So you get 18 months of guaranteed run time.
Note that I put the power consumption and cost per KWh to zero since they cover those costs. Like I said before. Below you can see the recent changes. On March 24th alone, it became 5. On Feb 10th, another 4. As Bitcoin prices surge, more people try to mine it, making it harder and harder to mine.
The screenshot below is the same Genesis Mining scenario with estimated difficulty added. Now you might not lose that much, but again this is the more realistic scenario with companies like this. And again, most people are feeling good because the value of Bitcoin has gone up enough to look like a positive return. Hashflare has the exact same outcome as Genesis Mining.
Nicehash is a really good alternative to the above. The crash of Bitcoin in is the perfect example of this. The second fundamental flaw is that we forget that the person with the most information will usually win. There are huge investment banks, and major financial parties interested in cryptocurrency. They have access to a lot more information than I do. While the financial market is heavily regulated, the crypto market is still in a grey patch. There have been a huge amount of speculation about large sell offs, and insider information.
Now remember, these investment banks literally hire the best minds in the industry, and spend millions a year on the top research around the world. Last year, according to Hedge Fund Research Inc. The year before, the average hedge fund earned 6.
People who succeed are going to share it more than those that lose. We think we can beat the odds, even though the systems are designed to on average make us lose more than we gain. He said, if he can guess the next 3 market movements right, you should join his course. But what he did was email 5, people that he thought it would go up, and the other 5, people that he thought the market would go down.
An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
These funds follow their benchmark index no matter the state of the markets.