Stories of losses in the stock market are banal and repeated with enviable constancy. Following a few simple rules, you will be almost one hundred per cent insured against leakage of deposits and large drawdowns. In fact, this whole set of measures includes – trading recommendations, asset management and risk insurance. The digital money market can be very dangerous for new investors. You can lose your savings by trading coins, and not making transactions. We tell you how not to be left without funds due to your own mistakes and protect yourself from scammers.
The cryptocurrency market provides many opportunities not only to increase capital but also to lose it. You can lose your savings due to a sharp drop in the exchange rate of coins, as a result of their erroneous transfer to another exchange or exchanger, using the services of scammers and in other ways. So, only using reliable crypto bots platforms like Zignaly, provide loads of opportunities to increase income. We analyze all the dangerous moments and explain how not to be left without your money.
Often, users themselves become the cause of losses in cryptocurrency. It is common for inexperienced traders to sell assets when prices fall and buy them when prices rise. Such a strategy usually leads to negative results.
This has at least two reasons. First, beginners are greedy. We recommend that you learn how to take profits and not regret that the price of an asset continued to grow after it was sold.
The second is that newcomers do not know how to recognize losses. Practice shows that it is psychologically very difficult to sell an asset after its price has gone below the purchase level. But it is much better to do this than, for example, to invest $10,000 in bitcoin and then wait several years to no avail for the opportunity to break even.
In order to avoid these mistakes, experienced traders and investors develop their trading strategies. First, they divide the capital into parts. This allows you to reduce potential risks and lets you make transactions in parallel. Secondly, they calculate in advance how to act in a given situation. And they use additional earning opportunities, for example, on bitcoin lending.
Compensation for losses
After exiting a losing trade, a trader may want to make up for the loss by entering a new position, but this is not the right goal. Novice traders should try to turn off emotions and work with a “cold head”. The goal should be to obtain profitability: some transactions are negative, some are positive, but the main thing is that the overall balance should increase.
If the overall balance is decreasing, it is worth taking a break and conducting a thorough analysis of trades to determine the reasons for the failures.
The most common risk in the crypto market is to lose capital on a depreciation. The price of digital assets is extremely volatile, it can rise and fall by tens of percent during the day. For example, on April 10-11, Bitcoin fell by 50%, and on July 3, its quotes fell by more than $1,000 in a few minutes. Experienced traders use special orders – stop losses in order not to lose on a sudden drop in the rate of a coin. When making such an application, the user indicates at what price the asset will be sold if it becomes cheaper.
We singled out trading with margin, leverage as a separate item. This is a tool that allows you to borrow money from the trading platform. In return, she takes your funds as collateral. If you lose the amount you borrowed from the exchange, it will keep your funds for itself.
Leverage is now very popular. It allows you to increase working capital by two, three and even 100 times. On the one hand, this is an opportunity to earn a lot. On the other hand, it is risky to lose everything at once.
Bad investment choice
Another risk is a bad investment. There are at least 5,500 cryptocurrencies currently on the digital asset market. A significant number of these projects are abandoned or were originally created solely to raise funds for the project.
Accordingly, there is a high risk of investing in a dubious coin. And it is the higher, the lower the specific asset in the capitalization rating. However, cryptocurrencies leading by this indicator do not guarantee profits.
Therefore, it is extremely important to approach investments in digital assets carefully and with all seriousness. You can’t buy cryptocurrency just for the reason that right now it is on the buzz. To invest money, it is better to choose tokens that have a project with a real team, product, and results.
You always need to think about bankruptcy. Or be created exclusively in fraudulent topics. If this is the case, then, most likely, the tokens issued by the project will lose value over time. Therefore, it is important to diversify your investment portfolio by acquiring several different cryptocurrencies.
The bottom line
There are many risks in the crypto sphere. The main one is to lose everything on the fall of the cryptocurrency rate. To reduce the likelihood of this, we recommend that you use stop losses. We also advise you not to buy assets at once with all the money, but to divide them into parts. And, of course, do not use margin leverage without proper preparation, otherwise, you can lose your funds even faster.
It is extremely important to carefully approach the choice of coins for investment. It is better to pay attention to cryptocurrencies, behind which there are real projects that have a real model that can be used in life.