Are you a crypto trader learning the ropes of blockchain? Do you struggle with making high-end risk decisions when trading? Well, you’re not alone.
Managing your risky decisions when the crypto market doesn’t look too good is an important skill every great trader should master. Sadly, this is seldom the case.
According to Forbes, 38% of cryptocurrency investors have reportedly lost money rather than profited, and only 13% broke even (that’s crypto speak for earning their investments back). And with current changes in the crypto industry, particularly for Nigerian traders, it may worsen. But it doesn’t have to—at least not for you.
So how do you break out of the chain?
First, you must understand that the cryptocurrency market is not child’s play.
Prices can skyrocket one minute and come crashing down the next. This consistent swing presents thrilling investment opportunities and daunting risks of steep losses. So you must be prepared to navigate turbulent fluctuations with skill and the right tools.
What are these tools?
The pillars of crypto trade skills include:
- DYOR (Do your research)
- Predicting Market Volatility
- Risk Strategy
DYOR: Do Your Own Research
Don’t let the fancy acronym fool you, this is the most important step in crypto trading. Before making that decision, you must adhere to the number one rule of investing in the crypto market…doing your research.
Why is it so important?
Well, that’s because there are more crypto influencers than actual knowledgeable experts. You could Google any crypto topic online and receive countless inconsistent and profit-oriented results. Apart from the inconsistencies, you should know that crypto trading is highly relative, meaning, strategies that work for others may not necessarily work for you.
Any decision made in the crypto world comes with disclaimers because of how volatile the market is, so ensure you DYOR before throwing hard-earned money into it.
Predicting Crypto Market Volatility
I know this may look like a superpower, but trust me, it’s totally achievable—to a great extent.
How so? Simple; it’s in the data.
Unlike the traditional stock market, crypto never sleeps. Trades are made every hour, with no downtime, just like us at Jackocoins.
This endless cycle allows prices to flip at any hour as major events unfold worldwide. Additionally, the crypto market’s relative youth and small capitalization compared to established markets contribute to wildly unpredictable price action. These wild swings are evident in the data, as Bitcoin and other leading cryptocurrencies routinely experience double-digit percent price moves in a single day.
Basically, market volatility (which is cryptospeak for the extent of price fluctuations over time) can be influenced by some common factors, which include:
- Sentiments
- Regulations
- Technology
- Whales and Market Manipulation
- Economic Indicators
- Geopolitical Influences
- Currency Movements
- Liquidity
If you study the crypto market well enough, you’ll see that these fluctuations can be a double-edged sword. This will help build your confidence when making risky decisions.
Crypto Market Risk Strategies
Although not every strategy works for every trader, some strategies are fundamental, just like this one.
Becoming an expert trader demands an unwavering ability to stay level-headed and make rational decisions, even under immense pressure. Thus, applying robust risk management strategies is crucial for traders seeking to weather the storms of volatility.
So what are these management strategies anyway?
Master Discipline and Emotional Detachment
There’s no milder way to put it, business is business.
Emotional impulses often cloud judgment, leading traders down the treacherous path of rash decision-making. Maintaining unwavering discipline and emotional detachment from the market’s turbulent waves is vital for effective risk mitigation. Ensure you adhere stringently to your predetermined trading strategies, resist the temptation to chase losses desperately, and remain steadfastly immune to the corrupting influences of fear and greed.
An important pitfall to avoid is FOMO (fear of missing out). A lot of vulnerable traders have fallen prey to this strategy. This is why a resolute long-term focus is key to weathering volatility’s storms.
Portfolio Diversification
Diversification stands as a pillar of asset management, and its importance is magnified exponentially in the high-stakes realm of cryptocurrencies. By strategically distributing one’s portfolio across diverse digital assets, traders can reduce their risk exposure, rendering their overall holdings more resilient against the turbulent tides of adverse price movements within any single market.
However, it’s crucial to recognize that even a judiciously diversified crypto portfolio should not constitute just one component of a holistically diversified investment strategy. Incorporating additional asset classes such as stocks, bonds, and commodities provides an anchoring ballast of stability while shielding against risks unique to the crypto ecosystem.
Position Sizing
Prudent position sizing is indispensable to effective risk management during volatile crypto trades. Resist the siren call to overcommit a massive portion of your capital to a singular trade, to avoid catastrophic losses in case the market currents shift against your position.
Also, establish and adhere to predetermined risk parameters, such as capping each trade at a defined percentage of your overall portfolio value. This principled approach to trade sizing instills discipline, curbs runaway losses, and preserves your capital reserves against terrible losses.
Set Stop-Loss Order
What is a stop loss?
Stop losses are risk management tools offered by most cryptocurrency exchanges, allowing traders to automatically offload assets once prices dip below predetermined thresholds. This safety net comes in various configurations:
The Right Trade Risk Partner for You
Imagine you’ve gone through the storms of the crypto market and made a big profit. However, when you try to convert it to fiat, you find that your crypto exchange still trades at the old coin rates!
That’s not good. You shouldn’t waste time dealing with old rates, at least not with us.
Why not switch to the Jacko side and experience high coin rates, coupled with a secure crypto wallet that can hold your assets for a long time? With Jackocoins, you don’t need to worry about the big stuff; we have your trading needs covered.
Simply download the app today, create your account, and start trading the Jacko way!
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