Lately, there has been a lot of crypto dips in the market and if you are new to investing these might scare you a lot. You may be freaking out and wanting to sell all your crypto but here are some things to keep on mind that professionals do:
1. BE PATIENT
When being patient is hard, zoom out and notice how small most of these movements really are on a longer term graph. Pullbacks and corrections are healthy, especially when a cryptocurrency is growing.
2. BEWARE OF BUYING AT ALL TIME HIGH'S
Buying when price is in the green is more risky. I’m not saying that this will definitely result in failure. I’m just saying beware. As mentioned above, pullbacks are normal. Sometimes people who bought in when it was half the price decide to pull profits. Sometimes when there has been a lot of hype from the coin and everyone is trying to buy it, this can cause the price to rise beyond a value that a lot of people think it’s truly worth at the time. They will often sell in anticipation of a market correction, which will allow them to buy back in at a lower price. Seeing this dip causes some people to freak out and sell at usually at a loss. It becomes a snowball effect. On the positive side though, a lot of people see that dip as an opportunity to buy at a lower price. As the price begins to rise again, people realize that the coin is not dead after all, and before you know it... the dip is over.
3. DO NOT INVEST MORE THAN YOU ARE WILLING TO LOSE
Investing is a risk and it can be unpredictable. I wouldn't put my emergency fund in and expect it to double in a week cause I'm not willing to lose that. I wouldn't put in the money I need for a Christmas vacation because otherwise I could end up with no holiday that I worked very hard for. Just remember, it might go down before it goes up. It might take 2 weeks to go back up. It might take 2 years. It’s hard to predict when some of these could take off as it is so unpredictable. The whole market could fall for a while for reasons completely unrelated to the project. A random currency might be represented badly in the media and dip. It might have a new release that’s not immediately perfect and dip. It might take longer than estimated to develop new features that will make it grow. These things all happen.
4. DO NOT PUT ALL YOUR EGGS IN ONE BASKET.
You know what? Not every project will take off, so it can actually be really risky to invest in just one coin. Those exciting articles about a 20-year-old who became a millionaire over night by dumping his college fund into a coin you’ve never heard of might make you feel tempted. Of course. But how often do you hear that? The more likely case is for someone to lose all of it and usually the media makes it sound wayyy better then it actually it is.
5. EMOTIONS HAVE NO PLACE IN YOUR INVESTMENT DECISIONS.
They most likely will steer your wrong. If you have a solid reason to believe in the project, and nothing about the project or the need for the project has changed for the worse, there’s probably no reason to panic and no reason to sell. Unless you are a skilled day trader and are using this strategy regularly, don’t freak out over every little movement. And even if you are a regular trader, still don’t freak out.
Overall, if you believe in your cryptocurrency coin, wait it out and let it accumulate while it’s still low, and hold. Be aware of the future of the project and its potential to to grow and not just what it is now. Also, buy something just because someone said that you should can be risky and some well done research could save you. Make sure you look for the reasons why a project might fail in addition to the reasons why it might succeed and try to get your information from more than one source. Just as a reminder, each cryptocurrency transaction you make is a taxable event, so keep that mind for when tax time comes up.
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