All your points don't seem new anymore. These are some points that have been very commonly discussed but many seem to fail to do well. You may know that not all traders are able to control themselves not to be greedy, they will panic when there is a big correction and that's not just once.
After all, self-control and emotions also have to be good points to profit in this very volatile market. You must have good management which will help you in the end. Analysis is also needed, it will be complex.
Topic: How to avoid future losses in crypto - page 3. (Read 550 times)
According to finbold, Apple, Microsoft, Amazon, Tesla and Alphabet companies have lost a combined total of $3.4 trillion this year alone. These stats are only relevant to this post because I just want to use it to show that losses cannot be eliminated entirely.
While losses cannot be totally eliminated, it can be controlled and as well avoided to an extent. As a crypto trader one thing you should not do is leave your funds in exchanges. This cannot be emphasized enough. The least you can do is keep your coins in a decentralized wallet. The best is making use of an offline wallet.
There are common guidelines that are mostly overlooked but can be very beneficial if you adhere to them
Only invest what you can afford to lose
This saying is very common among gamblers. While investing and gambling have differences they also have similarities and this is one of them. It's too risky and even foolish to take your whole fortune into an investment when you know fully well you have nothing to fall back on.
Invest in Cryptocurrencies with long term potential.
Carry out thorough research of the project you are about to invest in. Do the work yourself too, don't just rely on speculations of other people because at the end of the day everybody will say what they think is right.
Try to have emergency funds
Emergency funds are funds kept somewhere else so you can fall back to them in case everything else fails. Like i said earlier, losses cannot be 100% eliminated so having an emergency fund is like having an insurance and it should be able to take care of you for like 3-6 months till you get back on your feet
Diversify your investment
I know some crypto enthusiasts will say most of your money and investment should be in crypto because crypto is the future ( well I believe crypto is not just the future but the present) but I am not of that school of thought. There are other things that are what investing it aside crypto. Among all the investments available today, crypto is on the list of the most volatile. While this can lead to heavy profit, it can also lead to heavy losses.
Do not use Leverages (Especially for those new to trading)
Leverage are borrowed money which you would payback with a fee after investing with it. This is one major reason a lot of traders go under and are drowning in debt. Despite the relatively huge profit that can come from it, I don't think it is worth the risk.
Read more about leverage here.
https://b2broker.com/news/what-is-leverage-trading-in-crypto/#:~:text=in%20an%20example.-,What%20Is%20Leverage%20In%20Crypto%20Trading%3F,100%20times%20their%20account%20balance.
Trading in the crypto market when everything is flourishing and the charts keep going up is easy. The trouble comes when the market takes a downturn, that's when it gets frustrating. It gets worse if the market keeps going down for a prolonged period. There are a couple of things a trader can do in a bear market to try and get some good out of a bad situation (afterall, if life gives you lemon, make it lemonade)
Buy the dip
A bear market is the best time to buy the dip. It is when you can buy different coins at relatively lower prices. This doesn't mean you can buy any coin available. No, don't do that. Like it's been said earlier, invest in cryptocurrencies with long term potential and also coins that have potentials of going up again.
Now you should use the “dollar-cost average” (DCA) strategy to invest. DCA is initially investing a certain amount of money in a predefined asset and at predefined intervals. Instead of taking your money and investing in a project one time, you divide it into smaller sums that can be invested at different intervals.
For example, If you have $5000 dollars to invest in a particular coin, you can divide it into five and invest $1000 periodically or divide it into ten and invest $500 intermittently.
You can read more on dollar-cost averaging here
https://cointelegraph.com/news/what-is-dollar-cost-averaging-dca-and-how-does-it-work
Your investment should go to different crypto assets.
We talked about diversity in your investment previously. Now the part of your investment on crypto should also be diversified. Don't just stick to one coin.
Do not panic
Keep a cool head (this is easier said than done). It may sound simple but its one of the most difficult things to do in a bear market. When you panic in these situations, you make poor decisions and make more losses. The crypto space of social media are with FUD so be mindful of what you take in.
https://www.cryptotradingbook.com/how-to-avoid-losing-money-in-crypto/
https://bitpay.com/blog/crypto-bear-market-strategies/
While losses cannot be totally eliminated, it can be controlled and as well avoided to an extent. As a crypto trader one thing you should not do is leave your funds in exchanges. This cannot be emphasized enough. The least you can do is keep your coins in a decentralized wallet. The best is making use of an offline wallet.
There are common guidelines that are mostly overlooked but can be very beneficial if you adhere to them
Only invest what you can afford to lose
This saying is very common among gamblers. While investing and gambling have differences they also have similarities and this is one of them. It's too risky and even foolish to take your whole fortune into an investment when you know fully well you have nothing to fall back on.
Invest in Cryptocurrencies with long term potential.
Carry out thorough research of the project you are about to invest in. Do the work yourself too, don't just rely on speculations of other people because at the end of the day everybody will say what they think is right.
Try to have emergency funds
Emergency funds are funds kept somewhere else so you can fall back to them in case everything else fails. Like i said earlier, losses cannot be 100% eliminated so having an emergency fund is like having an insurance and it should be able to take care of you for like 3-6 months till you get back on your feet
Diversify your investment
I know some crypto enthusiasts will say most of your money and investment should be in crypto because crypto is the future ( well I believe crypto is not just the future but the present) but I am not of that school of thought. There are other things that are what investing it aside crypto. Among all the investments available today, crypto is on the list of the most volatile. While this can lead to heavy profit, it can also lead to heavy losses.
Do not use Leverages (Especially for those new to trading)
Leverage are borrowed money which you would payback with a fee after investing with it. This is one major reason a lot of traders go under and are drowning in debt. Despite the relatively huge profit that can come from it, I don't think it is worth the risk.
Read more about leverage here.
https://b2broker.com/news/what-is-leverage-trading-in-crypto/#:~:text=in%20an%20example.-,What%20Is%20Leverage%20In%20Crypto%20Trading%3F,100%20times%20their%20account%20balance.
Trading in the crypto market when everything is flourishing and the charts keep going up is easy. The trouble comes when the market takes a downturn, that's when it gets frustrating. It gets worse if the market keeps going down for a prolonged period. There are a couple of things a trader can do in a bear market to try and get some good out of a bad situation (afterall, if life gives you lemon, make it lemonade)
Buy the dip
A bear market is the best time to buy the dip. It is when you can buy different coins at relatively lower prices. This doesn't mean you can buy any coin available. No, don't do that. Like it's been said earlier, invest in cryptocurrencies with long term potential and also coins that have potentials of going up again.
Now you should use the “dollar-cost average” (DCA) strategy to invest. DCA is initially investing a certain amount of money in a predefined asset and at predefined intervals. Instead of taking your money and investing in a project one time, you divide it into smaller sums that can be invested at different intervals.
For example, If you have $5000 dollars to invest in a particular coin, you can divide it into five and invest $1000 periodically or divide it into ten and invest $500 intermittently.
You can read more on dollar-cost averaging here
https://cointelegraph.com/news/what-is-dollar-cost-averaging-dca-and-how-does-it-work
Your investment should go to different crypto assets.
We talked about diversity in your investment previously. Now the part of your investment on crypto should also be diversified. Don't just stick to one coin.
Do not panic
Keep a cool head (this is easier said than done). It may sound simple but its one of the most difficult things to do in a bear market. When you panic in these situations, you make poor decisions and make more losses. The crypto space of social media are with FUD so be mindful of what you take in.
https://www.cryptotradingbook.com/how-to-avoid-losing-money-in-crypto/
https://bitpay.com/blog/crypto-bear-market-strategies/
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