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How to minimize losses when investing in cryptocurrencies

Anyone, somehow involved in the cryptocurrency market, is aware that there has been significant rise and falls of the market. Although each market dip has been followed by a recovery, every period of decline is stressful and hard to navigate for both experienced traders and beginners.

And although it is not so easy to hold on to the value of your portfolio in times of a market dip, you must always avoid emotional trading. Let’s see some strategies that can help you get past these hard times.

Don’t let emotions lead you

As we already said, you should always avoid emotional trading. 

Of course, to trade with cryptocurrencies, you should be well-informed. Besides that, remember that too much information isn’t such a good thing, especially in market downturns.

There are two commonly used terms in the crypto world, known as FOMO (Fear of Missing Out) and FUD (fear, uncertainty, and doubt). Those terms or conditions can influence your choice to buy or sell, although not every trader is ready to admit that.

The term FUD refers to a negative market sentiment, usually caused by a rumor, article or someone expressing his concerns. Although those statements are often not based on facts, they can have a negative effect on the price. The reason for this to happen is that traders believe the statement and start selling their assets. 

FOMO is exactly the opposite. If a trader sees a positive price action, he can easily get carried away.

To avoid such mistakes, do not forget that no one is able to predict the future. Of course, there is much advice and statements that can be found online but when it comes to the future of cryptocurrency, it is uncertain. So, when you are trying to learn about the latest news, confirm with multiple sources just to be sure.

Set your goals

One of the first rules, when it comes to cryptocurrency trading, is never to invest more than you are ready to lose. It is for sure, that no one wants to watch the price go down, when there is not much to do about it.

If we look at some good investor practices, we will see that they usually invest in more than one digital asset, as a long term investment. Furthermore, you shouldn’t forget that cryptocurrencies are active 24/7. As we know, crypto prices are quite volatile and that is why investors must predefine their trading strategies. 

Do not forget that crypto trading, as well as crypto investing, can be a risky process. That is why investors should set their goals to balance between the possibility of losing and the possibility of achieving gain.

Cryptocurrency HODLING

There is a term called unrealized losses, referring to the moment when the value of your assets has gone down. Of course, the loss is realized once you sell for less than the initial price you bought it for.

If we look back, Bitcoin has trended upward over the long term, although the price is going down because of some market corrections. History shows that prices are likely to recover. 

So, if you invest for the long term, you can see that negative price movements are usually temporary.

Stable assets

One safe option, if you are trying to avoid crypto volatility, is to convert some volatile crypto assets for more stable coins. That way, you can ‘lock in’ your balance and reduce the risk.

An example of a stablecoin is USDC, aiming to maintain a fixed value.

Of course, you shouldn’t forget that if you sell everything at once, it can cause crypto holders to lose out. To avoid that, it is extremely important to map out the idea of what profit you are aiming for and what loss you are willing to take. 

What are the opportunities?

Even in bad times, there are some good opportunities. Of course, you should know where to look. 

As it turns out, the dark and cold crypto time for one, can be a new window of opportunity for others. 

Buying crypto at a low price is a popular way for traders to get into the market. As we already said, the downtrend can be temporary, followed by peaks. 

Well, crypto traders use a good amount of knowledge and experience. Trading activities are not just for some kind of belief and can result in significant losses, when not executed right. is an automated cryptocurrency arbitrage platform. Our goal is to help you find the best trading opportunity and turn it to your favor. All you have to do is choose a subscription plan, and we will do the work for you.