How not to lose money when the market collapses badly.
The bearish trend that we are currently observing is not over yet. Panic has struck many investors unless it only worsens the situation. If you feel anxious, study these nine tips to help you choose a strategy to act in such difficult circumstances.
1. Do not try to guess what is the right moment to sell or buy.
It is comprehensive advice, and do not believe those who say that Bitcoin has reached the bottom, what does he know about this?
John Bogle, the “Godfather” of index funds, once said: “Of course it is wonderful to sell stocks at their highest and buy them at the lowest, but during the fifty-five years in these businesses I have never seen a person who has mastered this. No one has seen this person.
" If the professional investors who have the data of the last hundred years are unable to do that, how do you do it? Therefore, one of the strategies is limited to buying a lot during the downturn, but in no way should we believe that this is the bottom. And when you try to "catch a falling knife" you cut your hand. Remember, whatever strategy you choose, this first rule should always be adhered to.
2. Do nothing and keep assets in your hand (hodl) is a meme that has become the cry of all Bitcoin enthusiasts who lose when the market crashes.
The term came from the BitcoinTalk symposium where a user missed the word hold and was talking about a 2013 market crash. After five years, this strategy should have fully recovered. Waiting while bad times end and a new dawn rises is the classic method. But the cryptocurrency market is not the market for funds or classic materials. It does not have a history that assures us consistently that Bitcoin will definitely return to where it was.
Also, it should not be forgotten that stocks are the premiums of a company that sells real products to real people, and even in difficult times the business does not stop completely. The situation is somewhat different with cryptocurrencies.
Previously, Bitcoin was recovering from shocks and the Hodler group was being rewarded for it. But we have no guarantee that it will return to one of its previous levels, and this should not be forgotten. Like there is no guarantee that cryptocurrencies will inevitably collapse.
3. Proven losses Sometimes there is no need to worry that investments are melting.
Every investor bears losses from time to time, and this is part of the game and only in this way can you learn something. You should never invest more in cryptocurrencies than you were prepared to lose. So when you fix your losses, this process shouldn't be very painful. But if you are hurt, that means that you have deposited a large amount on you. Take into account that the time for the bear market is not over yet, and the situation may worsen and losses increase.
4. Complete the purchase. It says in the old saying: "Buy when you see blood in the streets."
Buying should be done when market participants are in a state of fear, and vice versa, meaning selling "during the hype" and this is the alphabet of trading. It appears that many are now in a state of fear. Traditional investors like Warren Buffett made a living by buying assets while the rest were selling them. This takes nerves of steel and determination to take risks, and he may recover that later. We remind you again, be careful, taking into account that cryptocurrencies are a completely new class of assets and there is no guarantee that their price will return to what it was.
5. Portfolio Balance Balance Market Breakdown A good time for portfolio review.
In such circumstances, currencies are clearly unstable and risky. Valuable projects come to the fore after the hype has gone into the folds of the past, and then a rational assessment of market prospects may be undertaken.
6. Look for Capabilities What are we looking for in a portfolio review?
The same thing we always look for: the team, the product, and the market they work for. All of the currencies and projects that were written to survive this collapse will be united by a set of common characteristics. First, it will have a determined, experienced and enthusiastic team, meaning that attention must be paid to those who work on the project and the community around them. Now let's look at the product they're producing. Does anyone need this coin? Does it solve a problem or perhaps present a new opportunity? Finally, to which market is the project directed? For example, Ripple's marketplace is the banks, Ethereum's target audience is the designers, and Stellar's customers are the people that banks are reluctant to do business with. The hype is over, and only projects that bring people real benefit will remain.
7. Use the average dollar value.
We have warned that trying to guess market behavior is fatal. So some investors prefer instead of waiting for the bottom to the average strategy when buying the cryptocurrency to transfer once a week or once a month for a fixed amount of money. Thus, when buying a cryptocurrency for $ 100 every month, the value of the purchase is mediated, that is, when prices are low, you receive more cryptocurrency with the same amount of money, and when prices are high or lower. Yes, this is not a bottoming out but you are charging the regular average price for buying the asset. It is a long known investment strategy that requires order. It should also be noted that this approach does not guarantee that you will not lose your money (like any other approach).
8. Learning It is difficult to always monitor how investments lose their value, but the effectiveness of learning at that is much greater. In such a situation, the market understands much better and sees viable projects and the reaction of their teams to what is happening. You also know more about yourself, about your discipline and your tendency to take risks. Let the market be in a downturn but it is important for you to extract from this state a benefit for the future.
9. Do not panic
Yes, saying here is easier said than done, but the most important thing is not to panic. The bear market is a period of great discipline and caution, and before making any decision, the material should be studied and everything weighed well. Don't panic and act with a clear mind.
