To make money from trading digital assets over a longer period of time, you first need to learn how to avoid losses, otherwise capital will not grow.
Aside from using platforms like bitcoin360ai.com/it that automates trading for you, here are a few proven rules and strategies can help you with this.
If you want to invest in a cryptocurrency or, for example, in Bitcoin, you should divide a large amount into several parts and invest gradually. It is impossible to predict with absolute certainty how the price of an asset will develop in the future. If you follow this rule, you will always have an amount of money left over to buy the coin in case its price drops sharply.
Of course, this is not the most effective strategy, because there is a chance that the value of the asset will increase over time and you will buy it at a higher price each time. In this case, however, you protect yourself from the loss of your initial capital: the profit from the first purchases made at a lower price compensates for the possible losses from the subsequent transactions.
Many Bitcoin owners believe that no matter how much bitcoin falls, they will still benefit in the long run. However, there are many tokens whose fate has developed differently.
For this reason, newbies are best advised to follow two pieces of advice. The first is to divide the capital into many parts and invest them in different assets. This is especially true during the boom in business start-ups. In such a market, one cannot predict the success of a particular project with certainty, so one should hedge against losses by diversifying.
Stop Loss Order
One of the biggest mental mistakes investors make is the fear of losing. You need to be able to sell the cryptocurrency and get out of the position in time. There are many examples of traders who bought assets and then lost everything because they tried to ignore the price drop for too long and did not notice the obvious death of the project.
That is why it is important to identify mistakes and close positions, even with losses, if the conditions for a further decline in the assets purchased are met. One of the tools for such situations can be the placement of stop-loss orders.
These are special requests for the sale of an instrument when its price drops to a certain level. If this does not happen, the trader can turn into an investor”, i.e. he must wait for the price development of the asset in order to close the deal at least without losses.
There is another solution, but it is only suitable for experienced traders. American call/put options can also be used instead of stop-loss orders.
The investor buys the asset and additionally a put option on it. Options of this type make a profit when the price of the underlying asset falls. If the price of the asset falls, the loss is offset by the profit from the purchase of the option. If the price of the asset rises, the profit from trading covers the loss from the purchase of the option.
Stop loss orders also reduce the influence of emotions on the trading process. Beginners often make mistakes out of panic, fear or greed, which lead to capital losses. Stop loss orders can help you not to panic in such situations: you plan a trade in advance and place the corresponding order to avoid heavy losses.
Cryptocurrencies, as excellent as they may be, are not free from disadvantages that do not make investments in Bitcoin and altcoins completely safe. And it’s always a good idea to research the market first and choose trading exchanges with broad functionality and good reviews.
For those who are just getting into the cryptocurrency world, we recommend such convenient trading gadgets as Bitcoin Era, as they have been operating successfully in the market for a long time.