Topic: "Don't invest more than you can afford to lose", meaning explained! (Read 282 times)

It's a good and low risky strategy, but profit won't be very big, if you isn't a millionaire. 

Anything does really require research before jumping in because you do just see it on other people or someone do tell you about money making opportunity and you do rush up on engaging yourself without even thinking and the possibilities on having a disastrous loss of money would be always there yet this market can swing up or change trend in a short span of time which we cant really seen on a traditional forex or stocks platforms.

But however, in this cryptocurrency, the total amount what we investing in it, also give an effect/impact of our proft and lose.
there's a risk, that's why cryptocurrency and trading by relying only on some bullshit techniques wouldn't work. those techniques mostly will not going to be happen a few days/weeks as we always expected.

What if my whole portfolio is in cryptocurrencies and 90% of it in BTC? Should I be emotional about it?


Good advice, but remember that most of the investors came to cryptos from stocks or forex or had no prior experience. So what does it mean heavily pumped? In stocks a gain of 100% would already be huge. 200% would be a bubble waiting to burst. For cryptocurrencies 300% is nothing. The fun starts after 500% After seeing this most of them lost track of when to get out. Trust me, I've been there. Sold at 50% gain, got back at 60%, sold at 80 and soon. Finally somewhere along the way at 300% gain i Just stopped counting and chose long position that took me another 300% up in 6 months. Now, after a year of bull market, when do you get out? Usually you don't until you're back at the bottom of the slope.

Many people wants to get rich quickly with crypto and they over leveraged which results in huge loss when market turns against them. Crypto is highly volatile and the best advice is not to chase the boat and buy any crypto that is heavily pumped. Don't go all into crypto and invest the amount you are comfortable with.

Sadly most of the crypto investors and traders failed to follow this rule while they are entering into the crypto field.But later they are worried about their mistake,so remeber that prevention is better than cure and don't be too greedy are the two things which can save ourself from serious problems which also suit for any thing in our life other than crypto investments.

This is the most common and important rule in the world of investing. Its very much a pity why many people say this without practicing it. This is the ever first rule in investing. Do not be willing to risk much in investing. Always invest within 2-3% of your total portfolio so that you won't be emotional with it

thankyou for your encouraging words.  i myself have been a victim of unintelligent tradings during high emotions.  these always result into massive losses.  large factor is for this is being greed and greed can make a person goes blind into believing something too good is true.

fortunately i didn't invest all into crypto during those times, otherwise i'll be living on the sidestreet now.

Not really. If you can afford to lose your whole $10,000 USD, then go for it. But if losing your whole investment might cause issues and problems on your life, then stay away from it. Invest as much as you can afford to lose. Just imagine what you will have to go through if you invest your whole money which is actually your life savings. You will be going through emotional trauma which won't be good for your life.

Let them lose on the way.
Let them think that everything was easy. Let them be wrecked.
Let them made mistakes.
Let them trade with high emotions.
 
Why?

Honestly without some errors, mistakes and inappropriate mindset, people will never learned while they are on progress. It's way better that they need to experienced those in order to become a better person not just in crypto world but on other aspects too.

People will continue to make loans to invest in crypto, people will continue invest  money they can not afford to lose to invest in crypto, and you know why? because people do not do it just with crypto, people do it in real life. See how many people make loans to banks to buy nonsense things, see how many people do not know how to manage their own finances, I could give many examples, but this is not the case now, most people will not change and if you insist that they should change? they respond: "Money is mine and I do whatever I want with my money"


 

should not it be  $1000?

I agree with this statement and I try to follow this strategy investing only the part of my budget because I am afraid to lose all I have now

There is really no explanation needed for something like that ?
Does anyone need more examples or caution stories and what not to understand ?
Do not invest more than you can afford means literally not to invest the money you do not have the luxury of losing ?

There was some dude who took out an insane loan from a bank to buy bitcoin and now that bitcoin is low he is having trouble paying is loan and will keep paying it for the next 3 years, by his logic as soon as he got bitcoin it would have tripled and he would pay it back with interest and still have double the money he took out after all is paid. If you really believe what he did was logical, I am sorry but you deserve to lose your money.

I have never thought there is any special interpretation to that phrase ever since I have come across it in trading. It also not only applicable to trading so also investing and gambling. For investing, its even simpler, "never commit what you will need to survive in the short term" as that could mean making some bad decisions. While in the case of gambling, its just so straight forward you can really lose it fast with the chance of it coming back slimmer than you losing more if you continue with it.

But unfortunately, those who would not listen would not as you see them panicking over what is not, threads about how price is crashing, "why is my ETH falling?", "when will the next bull happen?", "will bitcoin reach $10,000 before August 31?" along other ridiculous questions that can only be answered by the forces of demand and supply or some high level of information cabals (if it exists) not on the forum here.

No, but in my opinion, we should invest more now, so be patient, hold, buy, be determined to hold the coins until they rise again, do not sell them at the price. lower than the purchase price

Yes! I believe that! Only invest those money that is excess to your budgetary line. Divide your income and try to save it for an investment so that, you can start to invest. If we will invest a capital that is needed for our daily life, we will regret if it will loss. A lot of stories I have heard that they invested their last money and succeed, but I think it is not happening most of the time because if you risk your needed money for survival and it will lose, you will blame your investment.

It is not only that crypto market is risky but even other investments like share market as well. Any risky investment you should put only the money which you can afford a loss. Not only that we need to learn to diversification because by doing that we can reduce our losses in the investment in the long run. We never should invest all our money either in any one coin or one company share.

But here are so many people who greedily save all the money they have and hope to be rich in the near future is a very wrong thought, so let's often understand threads like this might make everyone aware of how risky the cryptocurrency market is, especially in trading, losing and panicking every day they meet I think they are not strong and eventually lose.

AKA. If you are worth 10k don't put all 10k in. Put $200 bucks 

You are right herurist, and that's exactly the case with majority traders in the market, being only focused on their gain and totally ignoring the the basic rules and then finding it hard to cope with the market after the mistake is made and they keep questioning and blaming the market

What else would that mean is just we don't want to do anything if we don't have enough money to invest in. People tend to chase money even though they don't have the actual ammunition for it.

That is the basic rules we should know and follow when decides to replace our money into market with investment method. Most of us only see the profit and ignore the risk, using this guide will minimize our risk from bigger lost. Profit is good but break this one will make you bankrupt. Thank you for your post and see you next time.

Thank you BitHodler for buttressing that point, you have made it even clearer to understand and thanks for your kindness, I appreciate

It definitely applies to all people calling themselves traders, but not so much (at least in my opinion) to people investing in Bitcoin for the very long term, because as long as you don't sell your coins you won't lose anything.

Losses on paper are part of every form of investment and should always be disregarded. In the same way profits on paper doesn't mean you actually made any profit, because you only profit when you sell your coins at a higher price.

You got the trading part right, but maybe it's a good idea to include in OP that you as investor only lose when you sell at a lower price, because trading and longer term investing is not exactly the same.

Hi everyone,
I wish to explain what this statement actually means and how important it is to everyone.

The first time I came in contact with it, it was like a turn off to me, but later I understood it and why it stands that way. But to some it presents a negative attraction to them. Human beings like to do what they are told not to do because they thought it was good that's why you are trying to prevent them from doing it, but this is not the same with this.

Now this idea helps isolate your mind from unnecessary worries after you have invested your money, and enables you to make intelligent decisions especially during the bear market. Particularly the day traders find it very useful daily, and of course for long term holds. The thought will give you the mind to hold your coins till profit and prevent you from selling at loss.

It does not mean in any way that you will lose the amount you are investing, but also if it happens you will not need to commit suicide because it happened. This is a preventive measure to save your heart from unexpected occurrences should it happen.

In actual sense, "Don't invest more than you can afford to lose" only helps you not to lose your money finally.

Remember that intelligent trading decisions cannot be  made effectively with your emotions active, so avoid trading with high emotions.

Happy trading guys