Fear of Suffering a Loss In Crypto Trading? Have a Look at These Clever Ideas
Crypto trading is one of the best options for having higher returns against your investments with no hassles of paying taxes, fees, compensation amount, and so on. There has been a steep increase in the crypt investment, but there are risks as much as it promises to return. The crypto market is quite volatile, and therefore, there are high chances that you may end up making a bad deal and losing a fair share of your investment. like the BitIQ trading app, you can learn more about bitcoin.
These losses can give a huge blow to your trades, thereby forcing you to close the position before the price can move in your favor. Many traders usually take such a drastic decision in FOMO and end up missing some of the most amazing opportunities with which they could have reversed their condition.
For this reason, we will describe some of the clever ways to prevent huge losses in terms of your investment.
Never Close a Deal Out of FOMO
FOMO or Fear Of Missing Out is one of the main causes traders suffer huge losses in crypto trading. The moment price starts moving against a set trade, traders either buy or sell the coin based on the direction of movement.
For example, if the coin price starts decreasing drastically, you will see most traders selling their coins to make a profit without realizing that the returns may not be fruitful enough. The reverse happens when the costs increase beyond the market cap valuation. Such actions will cost you a lot since your decision will be made haste without proper market analysis and rationality.
Open Up a Position After Studying The Price Movement
Also, for trading in crypto, you must open up a position in the market. This can be of two types: a short position that will stay open only for a day or two and a long position that will be open for a long time till the trader closes it. Most times, the trade’s success will depend on the position you have opened.
If the volatility has increased and the prices are changing rapidly, do not go for the long positions as you will suffer from the overnight exchange shifts. Similarly, when the market seems lucrative, you need a short position to get maximum profit without losing a dime.
Always Stick To a Particular Strategy
If you are an amateur or want quick profits, we suggest trying out the day trading. Such trades are opened and closed on the same day. Hence your trade won’t be subjected to overnight fluctuations. The risks of facing losses will also decrease considerably, and you will be able to retain your profits, regardless of how small or big the amount is. One thing is that you need to make sure that you aren’t combining multiple strategies.
Do Not Invest a Big Amount At Once
Investing in crypto is one of the best ways of earning quick and huge profits. But when it comes to trading many coins in a single trade, the risks of suffering losses will increase a lot. That’s why you shouldn’t invest in too many coins at once because if somehow the price moves against you, the losses can become bearable.
Furthermore, with all your assets at a single location, the chances of becoming a victim of cybercrime will increase. Any hacker can tamper with your wallet or steal the coins if everything is stored in a single wallet.
Introduce asset holding strategy
If we take the context of Bitcoin, you will find that despite the fluctuations in the market, Bitcoin has recovered its downfall and emerged as a market leader. The prices are likely to be recovered over time, and if you are investing for the long-term, you can see the negative price movement as a temporary shift. Holding such assets proves profitable. In the US, holding cryptos for a longer period is also beneficial from the taxation perspective.
In this article, we have explained the major steps by which you can stop yourself from getting into a wrong trade and suffering a hefty amount of loss. You can either implement a single strategy or come up with your plan to safeguard your assets.