Did you lose or win today? Do you know who you’re competing against?

First, you compete against one or several computers at a time, then you compete against a human, and finally, you compete against yourself.

It’s a common situation that may seem frustrating or even suspicious, but there are several reasons why it happens.

1. Cryptocurrency Volatility

Cryptocurrencies are extremely volatile, and their prices can change in a matter of seconds. That drop could simply be a typical market reaction and not necessarily a coincidence with your purchase.

2. Bots and Algorithmic Trading

Many exchanges use trading bots that operate automatically and can react in milliseconds. These bots detect trends and adjust prices quickly to take advantage of any opportunity. Thus, your purchase can trigger a sale by the bots, causing a small drop in price.

3. Slippage

When you buy in a low-liquidity market, your purchase may push the price up slightly, and then it may go back down or even lower when you complete your order. This phenomenon is called slippage and is common in lower-volume assets.

4. Market Manipulation

Some traders or “whales” use tactics like “stop hunting,” placing large orders to move the price and take advantage of the temporary drop. This can cause the price to drop right after your purchase.

How to Avoid It?

- Set Limit Orders: Control the purchase price and avoid slippage.

- Trade in Liquid Markets: Ensure there is enough volume to reduce the impact of your purchase.

- Avoid FOMO: Instead of entering on a sudden rise, wait for the price to stabilize.

Understanding these dynamics and being patient will help you have a better experience when trading cryptocurrencies.

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Did you lose or win today? Do you know who you’re competing against? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.