Introduction
If you’re a cryptocurrency investor, you’ve probably had your share of losses. It is possible to avoid losing money completely, but it takes effort and knowledge to do so. Here are some strategies that can help minimize the risk of losing money on your investments:
Have a strategy
You should have a strategy before you start investing in cryptocurrency. You need to know what you’re investing in and why, as well as how much money is at stake.
You should also have a plan for when to sell your holdings and when to buy more cryptocurrencies.
Think long-term
The first thing you need to do is think long-term. People who are day traders or invest in the short term are more likely to lose money than people who invest their money over time, because they’re not taking advantage of the long-term benefits of holding crypto.
- Don’t be a day trader: Day trading means investing in and out of a position within 24 hours. If you can’t afford to lose more than 50% of your investment (which will happen if it goes down), then don’t try doing this at all! It’s just too risky for most people who want to start off small with crypto investing.* Don’t try to time the market: Timing is not something that works well for most people trying out digital currencies because there isn’t much control over when prices go up or down based on what other investors decide so instead just buy low sell high but only when necessary because otherwise risk management becomes impossible.* Don’t be greedy: Greediness leads directly into making poor decisions which could lead them down paths where they lose everything including their jobs and homes.* Don’t be fearful: Fearful investors tend not focus enough on potential gains while others focus too much attention towards losses resulting in missing out opportunities which might have turned out great if taken advantage earlier instead now being left behind by those who did get ahead first
Diversify your portfolio
Diversification is an important concept in investing, as it helps you mitigate risk. While diversifying your portfolio can be done by investing in several different types of assets and industries (for example, stocks and bonds), this article will focus on the more specific method of diversifying by spreading out your investment across multiple cryptocurrencies.
There are many different ways that you can do this—you could use a service like [CoinTracking]or [Blockfolio](https://blockfolioapp.com/), which track your investments for free! Or if you’re feeling crafty, there are plenty of DIY options available online as well: I’ve found this one particularly helpful: [Crypto Portfolio].
Don’t follow the herd
- Don’t follow the herd. This is a common mistake among new investors, who tend to buy when everyone else is selling and sell when everyone else is buying. In other words, if you see your friend or cousin posting about how much they bought Bitcoin at $20 last year, don’t be like them! Be smart and wait before jumping into crypto markets; it takes time for these currencies to develop an ecosystem and become more widely accepted by consumers (and therefore more valuable).
Use trading bots (if you know what you’re doing)
A trading bot is a program that executes trades on your behalf. It can perform complex calculations and make decisions for you, so that you don’t have to.
A good trade strategy is essential for successful cryptocurrency trading. However, even if you have the best of intentions and follow all the rules as closely as possible, there are still going to be times when things go wrong for reasons beyond your control (e.g., a flash crash). A trading bot can help mitigate those risks by executing trades automatically in response to market movements or other events that might cause losses if left unchecked by human traders themselves—and it will also keep track of all this information so that it’s easy for anyone who wants access (elderly parents?)
Set realistic goals and stick to them
You’re not alone. A lot of people are afraid of losing money in crypto. They don’t understand the technology, and they think it’s too volatile for them to invest their hard-earned cash in.
But that’s just not true! There are ways you can avoid losing your investment capital—and even make it grow over time!
Don’t let FOMO take over your portfolio
FOMO is the fear of missing out. It can lead you to make bad decisions, invest in something you don’t understand and believe in or just plain lose money.
FOMO can cause you to invest in a coin that may have no real value or be overvalued. This is especially true when it comes to cryptocurrencies because most people are unfamiliar with them and therefore don’t know how much they should pay for one unit of that coin/token.
A good way to avoid FOMO is by learning more about what crypto has going on at all times so that if something interesting happens then there will always be a reason behind why it happened and not just because someone else wants us all (or rather me) out of their lives as quickly as possible!
Invest in short intervals rather than in one go
One of the most important things to keep in mind is that investing in crypto is a long-term game. This means that you should buy into crypto only when you have enough money to do so, and not all at once.
For example, if you want to invest $10,000 into Ethereum (ETH), then it might be better if you bought 0.3 ETH or 0.5 ETH instead of one large purchase of 5 ETH at once. This way you can spread out your risk over time instead of putting it all on one single cryptocurrency like Bitcoin or Ethereum Classic (ETC).
Another reason why buying small amounts makes sense is because there’s no guarantee which coins will go up in value over time; some may fall by half while others rise 100%. So when buying large amounts at once it’s impossible for us humans who live under uncertainty – ourselves included – not make mistakes which could lead us down dead ends with our investments!
Try different investment instruments
- Try different investment instruments. If you’re using a single strategy, it’s likely that your portfolio will be exposed to a single risk factor—and that risk could cause you to lose money. For example, if you invest only in Bitcoin and Ethereum, then when the price of Bitcoin drops by 10%, your entire portfolio is threatened because it has the same exposure as if you’d invested all of your money in just one cryptocurrency.
- Diversify your portfolio with multiple assets like stocks, bonds and other investments that diversify away from cryptocurrencies (e.g., gold). Having more assets means less risk overall for any given token price drop; however, this method takes time since each new asset must first be purchased before being added into an existing portfolio or traded individually again after being sold off elsewhere first (which could take days).
Losing money can’t be avoided, but there are ways to minimize it.
It’s impossible to avoid losing money in the cryptocurrency market. However, you can minimize your losses by following these three tips:
- Don’t be afraid of losing money when investing in cryptocurrencies. The only way to avoid losing money is not buy them at all! But if you do decide on buying some coins, make sure that they are worth their price tag before spending any funds on them.
- Don’t try to predict what will happen next in this new industry—it’s too unpredictable right now and there is no way for anyone outside its inner circle (i.e., crypto traders) to know what will happen next with regards to prices or even trends within specific markets.*
Conclusion
We know that losing money is never fun. But if you take the right steps, it can be less painful and more manageable. Now that you know what to do, we hope your portfolio doesn’t end up like ours did!
