Making a profit in cryptocurrency investing is exciting and everyone loves to talk about it. Not only is this engaging, it also increases engagement. However, when losing money is rarely discussed.
Regardless, everyone experiences losing moments in the cryptocurrency market. How you overcome it will determine whether you end up a winner. Next, I'll share some of my best tips:
How to protect profits
Buy when no one cares, sell when there is a lot of buzz
Don’t trust altcoins
Don’t quit your job to pursue cryptocurrency trading full time
Avoid quick profits, they can lead to destruction
Accept failure and losses
Let’s look at them one by one.
1. How to protect profits
It's not enough to just take a profit and sell, you also need to protect those profits! If you don't have a clear system in place, the crypto market can take away your profits very quickly.
There was a recent example of someone losing $400,000 on a trade. He didn’t start with $400,000, he started trading with $500. He lost all his profits on one trade.
Image source: yourcrypto
In addition to greed, every lucky person will eventually run out of luck and inevitably suffer losses. You will lose everything.
To avoid this, follow these steps:
If you're lucky enough to turn $500 into $400,000, your first priority is to protect those profits. This means that you don't trade those profits, but take them out. You can keep it as cash (more on that later) or buy gold or Bitcoin. It's that simple!
After protecting your profits, continue trading with your principal. In this case, the person above can continue trading with $500 or a little more because he can now afford it. Regardless, these profits should no longer be exposed to the market.
By doing this, even if the market goes against you and you lose your principal ($500), you still have $400,000 on hand, which will make you a better trader/investor over time, and Refocus faster after a loss.
Only if your strategy delivers good results over a long period of time should you consider adding a small portion of your profits to your trading or portfolio. It's that simple.
2. Buy when no one is interested and sell when there is a lot of buzz.
You should be deploying in a bear market, ideally when people start tweeting "Bitcoin is dead", that's the best time to start buying and taking risks. Always aim to maximize your risk/reward ratio, aka find asymmetric bets!
Using current market conditions as an example, in the event that Bitcoin shows weakness, I would keep that $400,000 in $USDC and earn the proceeds (like staking).
At the current yield of 29% per year, that $400,000 would generate about $10,000 per month without having to do anything. This is the real benefit from transaction fees and liquidation. If the market falls further, his gains will be even greater.
Image source: yourcrypto
I would not buy Bitcoin or any other currency right now. I would wait for a discount if the market continues to fall. Remember, you don’t lose anything by not buying in, you still keep your $400,000 profit! Protect them at all costs.
Once the market shows signs of bottoming, such as in a bear market, you can use these profits to buy Bitcoin through fixed investment (DCA). This way, even if the price of Bitcoin drops further or goes sideways, you will reduce your risk and have a good chance of profiting when the price eventually rebounds and reaches new highs. If you're patient, a good entry point can easily double that $400,000, or whatever amount you put in.
Look at the current cycle. If you had bought Bitcoin during the last bear market for under $20,000, you would have beaten most investors in the market. The larger your portfolio, the more Bitcoins you should own.
For example, I used my profits to buy Bitcoin under $20,000 during the last bear market. I didn't nail the $15,500 bottom perfectly, but looking back, any buy under $20,000 was an excellent entry point.
You can certainly play with altcoins, but they should make up a small portion of your total portfolio. If the ratio is too high, it is irresponsible and you will suffer heavy losses. Regardless, when you see mania in the market, start selling and stop buying, protect your profits!
3. Don’t trust altcoins
Altcoins are not reliable currencies! At best, they are just a good technical project. Most altcoins don't even require a token and are very poor stores of value over time. You wouldn't buy $10,000 of tomatoes to store your wealth, would you? Altcoins are more like tomatoes, they rot quickly.
A good way to lose money in the cryptocurrency market is to buy the latest altcoin release and hold on to it for the long term. Please don't do this. It's like buying tulips and hoping to get rich.
That's not what happened.
Altcoins are suitable for speculation in the short to medium term. That's all. With a time frame of more than a year, you are likely to suffer heavy losses. There are some exceptions, but overall, buying altcoins is not your path to long-term success.
They can make you rich overnight, but that wealth won’t last if you don’t follow the first point of this article. Most altcoins crash 90% to 99% in a bear market because there are no buyers, and the reason altcoins rise and fall quickly is because they are illiquid.
This means insiders can easily push them higher. Once they make a profit, no one can stop the price from collapsing. Bitcoin does not have this problem because it is the most liquid cryptocurrency.
Fundamentally, only Bitcoin is a reliable currency and is similar to gold in some ways. Ethereum doesn’t meet this criteria either, even though they like to call it “ultrasonic currency.” In reality, Ethereum is more like oil, with its price rising and falling in response to changes in network usage.
4. Don’t quit your job to pursue cryptocurrency trading full-time
95% of traders lose money and only 5% are winners. Trading cryptocurrencies is harder than your job and is available 24/7, which can be a bad choice. Instead, keep your job or find one you love, and invest in cryptocurrencies (mainly Bitcoin).
A good way to avoid large losses is to not trade cryptocurrencies. Instead, invest in this emerging industry. When you invest, buy the casino, invest in its infrastructure with a long-term view, rather than trading it.
Ethereum and its decentralized finance (DeFi) derivatives are a good example in this regard. Although difficult to predict, DeFi has made Ethereum what it is today (the “oil” of DeFi). Likewise, Bitcoin is and will continue to be a reliable currency.
If you want to protect your wealth, buying Bitcoin at low prices is never a bad choice. When you buy it, you don't buy it with the intention of selling it tomorrow. You buy it to hold it for the long term and then retire with it
How do i do this?
You can borrow it or earn income on your Bitcoin (see details here), and when Bitcoin hits $1 million in the next 10 years, that's when you retire.
As for altcoins, try to buy the cryptocurrency's infrastructure, not its memes. This is where the opportunity lies. Don’t bet too much on altcoins, but a good bet can bring you 10x to 100x returns.
I can't tell you which coin is the next Ethereum, but you can take some risks based on your age. As you grow older and wealthier, it pays to reduce your altcoin purchases and focus on Bitcoin to gain peace of mind.
5. Avoid quick profits, they can lead to destruction
A quick 10x gain on a meme can bring about fanaticism and greed, which will most likely lead to a bad trade later on. Don't go all out on this play. Never go all-in on an altcoin. Speculation is allowed, but it should be kept within a small range of the total investment portfolio.
Making your annual salary on one trade may change your life, but losing it all on one trade may also change your life. Meme coins are attractive because they can make you rich (or poor). They are high risk and are only worth trying if you have a smaller portfolio.
In this case, it makes sense to take more risks. If you already have a sizable cryptocurrency portfolio (mainly Bitcoin), then only use a small portion of your total portfolio to speculate on memes or similar high-risk coins, and nothing more.
If you make a killing, sell, never look back, and follow the first point of this article. Never sell Bitcoin for altcoins. If you find yourself doing this, there's only one reason for it: greed. This never ends well.
6. Accept failure and losses
Failures and losses are inevitable in this industry, but you can definitely reduce them, make them smaller, and that's where you come into play. The market has its own rules, and your job is to manage risks.
Making money shouldn't be your end goal. Instead, you should maximize your time and freedom. Bitcoin is part of the answer. Most people need to lose a lot of money playing other coins to realize this.
By accepting losses, you'll focus on what's important more quickly and improve your risk management. The top 5% of traders who win at this game do it because they do their risk management correctly. This means they lose money often, but in smaller amounts, while they make big profits a few times a year.
That's all you really need. Accepting losses is part of the process, but keeping them small enough so they don't throw you off balance. This takes time and discipline.
Be patient with yourself and find your comfort zone, it might not even have anything to do with cryptocurrency!
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: "Deep Wave TechFlow"
Original author: DUO NINE⚡YCC
