Some of you might be new to cryptocurrency trading, and some of you may be new hodlers. Hopefully, you were strong enough to hold onto your coins through the last two weeks. If you were one of the unlucky ones who bought at an all-time high, you might still be in the red. For the older hands at cryptocurrency trading, you likely hardly blinked an eye when prices dropped. Price drops, corrections, crashes – whatever you want to call them (depending on severity) happen and staying cool is incredibly important. Not only for your sanity but also to ensure that you make sensible decisions.
Here are a few tips to help you get through the next dip:
Yep, that’s the first tip. Stop and do nothing. This might seem counter-intuitive, and it’s definitely not the kind of response you should have in every situation. But, if its a bit of a drop, and you are holding long-term its usually ok. Its also a good option if you expect the prices to rebound soon. Just put your phone down and breathe.
a Lot of people new to cryptocurrency seem to think that the good should last forever, and the bad should only last a few minutes. Those minutes can start feeling like hours when the red percentages start increasing. If you’re really really stressed about it, you probably invested too much.
Markets are a game of psychology and domination, and the purpose of a market is to move money from weaker hands to stronger ones. If you react badly to a dip in prices, you will be exploited by those wanting to buy your position.
Think “Big Picture”
Use the time you have to take a look at your portfolio. I mean, really look at it. Evaluate all of the white papers, and look for weaknesses or flaws in the coins recent history. If the coin seems to be doing badly in the media (for a valid reason like bad tech), you might want to consider selling. Likewise, If you are finding positive information or if the company has made some new announcements you might want to consider increasing your position
If you do find a coin or two that you are wanting to get rid of, you might want to consider exchanging it for USDT (Tether – please research first). This currency is supposedly linked to actual dollars owned by the company. The price of tether should stay close to 1 USD per coin.
The other option, and one that I used before Tether was to exchange coins I no longer want into Ethereum or Bitcoin. These two currencies are generally seen as safe to hold. It might still drop after you exchange into BTC or ETC, but should return to normal. Remember, you only really want to do this to sell a position in a coin you no longer want.
Review your previous decisions
Making money feels great. when you’re doubling, tripling or multiplying an investment by 10,000% you feel like the smartest person out there. It also makes you want to spend more money because it’s so easy… right?
Lots of people felt incredibly smart when they rode Tron to glory in the past few weeks. Some, who held onto their positions lost much of their gains. Some people also invested at its peak, losing not profit, but their investments. As a basic rule of thumb, if you bought at a peak, you should wait to at least recoup your investment. Unless there’s a valid reason to cut your losses.
Ripple and Stellar, which I have previously looked at, also had similar fast rises. They also dropped just as fast. Still higher than before their rallies, but considerably lower than the highs. Look at your decisions over those periods, re-use the good tactics and bin the ones that failed.
Trading is all about patterns, with the occasional interference from press releases and announcements. Look for the patterns and capitalise on your findings.
Check your surroundings
As with anything, the ideas and people around you will influence you. If you are in some Discord “pump” group, or on a subreddit, you will have noticed that your mood goes down when the collective mood is down. Surround yourself with positive thinkers. Find experienced traders who can help you remain positive, and who can help you learn from any mistakes you might have made. Treat each moment as an opportunity. It might not be a short-term opportunity, but the advice of a calm and seasoned trader goes a long way in maintaining a healthy attitude to your future and future gains.
If you have any questions or comments, feel free to contact me on Twitter: @CryptTee