Bloody experience investing in cryptocurrency
The first goal when participating in the cryptocurrency market is “profit”. The higher the income, the higher the number of traders. This type of investment is really a basic type of investment that requires investors to have experience and make the right decisions at the right time. Here are 5 important lessons you need to know when investing in the cryptocurrency market.
Understand the essence of cryptocurrency
This is the basic knowledge that every successful investor should understand. Most of us understand this basic concept. However, the base is not enough. The electronics industry is changing rapidly. So unless you trade regularly or work in an industry, it’s easy to overlook the basics.
Cryptocurrencies are enablers that enable disruption across many industries with different use cases. Therefore, there are many nuances and aspects that you need to understand before jumping into the market. This new industry contains many complex technical terms and concepts that can confuse the layman. Like experienced investors in other fields: bonds, commodities, forex, etc., you need to understand the market you are entering.
Cryptocurrency market fundamentals are inherently emotional and volatile. However, once you have accumulated enough knowledge, you can easily structure and analyze your own market returns and manage your own risks.
Ignore the hype and marketing
Everyone has a different tendency to guess, but emotional choices are unavoidable. Analyzing the Bitcoin market from November 2017 to February 2018, a clear market trend can be seen during the 2017 bull run and the start of the 2018 stock market crash. However, most investors at that time only saw them as individuals and were pushed completely in the most unprofitable direction. On the other hand, as a larger segment or group (programmers, tech enthusiasts, crypto traders, etc.) it is not difficult to make the right predictions.
One predictable behavior is that we are prone to narrative sensations with an underlying dimension. If you touch the fear, if you don’t miss the opportunity, the over-the-top PR marketing trick can completely change the landscape of the entire market. As a result, marketing and public relations (PR) activities have been increasingly invested in construction over the decades.
The psychological background really drew us into the crypto investing space first. Many investment incentives such as massive pre-sale discounts, offers, promotions, programs, and paid reviews are common in an almost unregulated industry. This. The media, under the influence of other forces, have “added fuel to the fire,” which has piqued the curiosity, interest, and excitement of many. Ignoring the hype is truly an essential skill every successful investor should have to differentiate between a fundamentally good project and a mere scam.
You may be asking yourself the following questions:
- What are the foundations for a viable communications project? (Considering suitability, performance)
- Is the development team qualified?
- Unconfirmed issues?
Accept losing bet 9/10
Investing is basically just a bet where you have to accept losing 9/10 of that bet if not all of it. Early-stage tech startups are usually a risky game. Cryptocurrencies in particular are a particularly high-risk area due to their immaturity and speculative power. If you choose to enter this field, you must accept the risks first. However, you can still limit the risk ratio by analyzing and evaluating many factors such as: B. team strength, project viability, ability to achieve roadmap, token usability … .
Of the many investment fields, cryptocurrencies and stocks are arguably the two fields that have the most in common. However, the crypto market is still very young and volatile, with 9 out of 10 startups failing in their first 5 years of operation, despite over 60% of ICOs being completely wiped out. Moreover, it is impossible not to mention a scam or a Ponzi scheme. If you do not have enough experience, it is not uncommon to fall into scams or pyramid schemes. Therefore, every merchant must train the iron spirit not to be afraid of danger.
DYOR (Do Your Own Research) – Detailed evaluation
To enter the field without being fired, you must meet the physical and skill requirements. The investment is the same, apart from capital, you have to devote time to your own research so you don’t leave empty handed. But how much is enough? Understanding enough is not limited, but depends on the perception of each person. When I feel confident enough to analyze and evaluate project objectivity, I don’t just stop at a website or white paper. Today, many companies use trusted influencers, wealthy people or technology leaders to commit fraud. Without knowing the details of the white paper, the technical skills of the project, or the development team, you run the risk of losing money.
The cryptocurrency market is always volatile. Extraordinary paths are also expected in the future. At the same time, investors need to seize the right opportunities at the right time to secure the best returns.
How to manage capital so that the account does not burn
The ultimate goal of capital management is to provide security. Avoid the risk of being banned from trading. The second goal is to increase profits gradually, and the ultimate goal is to increase profits. Losers often invest all their capital in one trade. They continue to trade at the same or higher volume. Most losers try to get out of the hole they dug themselves. Good money management will help you avoid this hole in the first place. The deeper you sink, the harder it is to get out again. If you lose 10%, you need 11% to return to the initial level, but if you lose 20%, you need 25% to return to the initial level. And if you lose up to 40%, you have to win back up to 67%. And to lose 50%, you have to return 100% to the original.
You get rich slowly
Beginner traders often try to get rich quick. They may win in the short term, but in the long run they will throw it all back into the market at great risk. Did you know that someone who makes 25% of annual profits can become the king of Wall Street? A trader who can double his capital in just one year is considered a star of the industry. If you make 30% a year, I guarantee people will take money from you to manage (compare with saving in the bank for interest).
How high is the risk?
- Most traders are killed by one of two bullets: negligence and emotion. When an entrepreneur overcomes negligence and achieves a certain level of success, with increased self-confidence he lifts his head from the trench – and a second bullet appears. Confidence makes him more greedy, he begins to increase his risk on trades, and constant losses will take him out of the fight.
- A professional trader does not allow losing a small part of his capital in one trade. Tests show that the maximum risk a trader can take from losing a trade is 2% of the capital. This limit includes commission and slippage fees. If you have a $2,000 account, you should not risk more than $40 per trade.
- Most novice traders shook their heads in disdain when they heard this. Because many of them are undercapitalized and the 2% rule destroys the get-rich-quick dream. Most professional traders think 2% is too high, they don’t allow themselves to risk more than 1% to 1.5% of their capital per trade. The 2% rule helps you avoid the huge losses the market can inflict on your account. Even 5 or 6 losing streaks won’t get you out of the market.
- Whenever you check a trading signal, check the stop loss if the stop loss is more than 2% of your equity – ignore these trading signals and wait for a less risky entry. Waiting can dampen your spirits, but the potential for winning is greater
WARNING: Investing in financial products involves many risks which may not be suitable for some investors. Therefore, please think carefully and check yourself before you decide to link to this website. CryptoViet.com.