If you’re new to crypto and haven’t heard of panic selling, let us fill you in on the latest. Panic selling is when the market crashes, followed by so much fear and chaos that you sell all your crypto as quickly as possible before prices drop further. It’s selling at the worst possible time when it’s driven by fear rather than smart thinking. Pay attention, because these tips could be the difference between crying in front of your keyboard as you sell at the bottom, or laughing all the way to the bank as you weather the storm and reap the rewards.
Understand that volatility is normal for cryptocurrencies.
The first thing you need to accept is that the cryptocurrency market is quite volatile. Ups and downs are completely normal – it’s not an anomaly that we should be alarmed by them every time. Even the most popular cryptocurrencies like Bitcoin regularly experience declines of 20% or more all the time. When you first start investing in cryptocurrencies, it can be terrifying to see the value of your investment portfolio drop by hundreds or even thousands of dollars in a single day. But the more experience you gain, the more you will realize that such declines are normal.
Only invest what you can truly afford to lose.
This is crucial: Never invest more in crypto than you can afford to lose in its entirety. Yes, while crypto can be fun and profitable, there is a real risk of losing everything you invested. If the only money you have invested is money that would be nice to see go down to zero, it eliminates a huge amount of panic during dips and crashes. Panic stems from over-leveraging money you need for rent, food, or other critical expenses. This is what causes weak hands.
Set firm rules – and stick to them no matter what!
Set some simple rules in advance to govern your buying and selling decisions, and then follow them like a robot no matter how crazy the market gets. Make decisions about things like:
* What percentage of profit will you make? (For example, selling 25% of my Bitcoin if it doubles)
* What percentage drop will you automatically sell to avoid bigger losses? (For example, sell if my ETH drops 40% from my entry point)
* How much of your investment portfolio will you invest in any one asset?
Use trusted and reputable trading platforms.
When it comes to executing your buy and sell rules smoothly, you want to use trusted and tested cryptocurrency exchanges and trading platforms – especially during peak periods of volatility and volume. Sites like Binance, Coinbase, Gemini, and Kraken are veterans of the cryptocurrency trading scene. Their platforms are designed and built to handle crazy traffic spikes during market turmoil without a hitch. So, do yourself a favor and stick with major exchanges and platforms like Binance. Pay a little extra if necessary – it’s totally worth it to prevent the panic of not being able to trade or view prices when you need them most. Not having a reliable platform during downtime will only exacerbate panic selling impulses.
Keep calm and hope for the best.
Sometimes the best cure for panic is simply to take a few deep breaths and meditate – both mentally and on your trading charts/portfolio overview. During dips and crashes, your mind can easily get caught up in a vicious cycle of short-term rumination that amplifies feelings of fear.
Finally
If you can stay calm, collected, and rational by applying these tips, you will avoid joining the panicked crowd who suffer permanent heavy losses before the tide rises again. What strategies have worked for you to avoid panic selling? Are there any other tips you can add from your experiences in dealing with crashes?
