In the cryptocurrency market, three types of investors are most vulnerable to losses. Understanding and avoiding their mistakes can help you keep your wealth:
1. People who hold a large position in spot and do not set a stop loss
This strategy is very dangerous. The cryptocurrency market is extremely volatile, and no one can accurately predict the direction and magnitude of the next market fluctuation. If you invest heavily and do not set a stop loss, your assets may shrink significantly in the slightest adverse situation. For example, the market crash in May 2021 caused many people to suffer serious losses because they did not set a stop loss point.
2. People who like high-leverage heavy contracts
High leverage can indeed bring considerable returns in a short period of time, but its risks are also multiplied. Sudden market fluctuations, such as news events or instant changes in market sentiment, can lead to a liquidation, which may eventually make you lose all your money.
3. People who do not stop profits in time when they make money, and hold on to the end when they lose money
This mentality makes many people miss opportunities and even suffer greater losses. Greed makes you miss the best time to stop profits, and fear makes you unwilling to stop losses when you lose money, and you may lose more in the end. This mentality is particularly fatal in the volatile altcoin investment.
Ways to avoid these mistakes:
Manage positions reasonably
Don't put all your money into the same investment. Diversification can effectively reduce risks. In addition, use only a portion of the funds for each transaction to avoid full investment to cope with market uncertainty.
Set stop loss and take profit
Set stop loss and take profit points before each transaction so that you can stop loss in time to protect the principal when the market trend is unfavorable, and lock in profits when the expected return is reached.
Use leverage with caution
Leverage is a double-edged sword. Be very cautious when using it and avoid excessive leverage. A reasonable leverage multiple can gain returns while controlling risks.
Keep a good attitude
Investing is a marathon, not a sprint. Don't lose confidence because of short-term losses, and don't be blindly optimistic because of short-term gains. Only by calm analysis and rational decision-making can you be invincible in a volatile market.
