Equally important is your stop-loss level, which is the cutoff point for losses.
This is where most traders stumble. They fall in love with the trade and the coin and they get attached. And as soon as that happens, they lose sight of their stop-loss level.
Remember: cryptocurrency is far more volatile than the stock market. Volatile movement in the stock market is 2-3%. Cryptocurrency can see up to 80% in just a few hours.
And if a dump like that happens, you don’t want to be the last one holding your coins.
5. Hedge Your Bets
In other words, make use of the fact that you can bet on either side of bitcoin’s movements.
This fact can work to your advantage if you know how to play it right. Or, you know, how to play it at all, which is the minimum you should be able to do.
Let’s say you have 90% long and 10% short. This assumes you’re more confident (by no small margin) in the long position.
There’s also something to be said for increasing your cryptocurrency investments over time.
Essentially, you’re planning ahead of the version of you that will want to buy and sell often, because it reduces the pain of sudden price changes when you only have one point of entry into the exchange.
It’s like any other form of investment: diversify your portfolio. Or, in this case, diversify the time you buy your coins.
It’s hard to know what’s the best time to buy. You have to trust your gut on this one.
Related: Income + Tariffs + Inflation = Underperformance
6. Know a Thing or Two about Altcoin
Basically, you should understand the power of the types of cryptocurrency that are not bitcoin.
Also known as altcoin.
Because they’re, you know, not bitcoin, they’re less prone to public speculation. Which also means they have smaller market caps which are prone to larger price swings.
Of course, with greater risk comes greater rewards. And that, friends, is the hidden beauty of altcoins.
And if you don’t trade in them at all, you’re cutting yourself out of an opportunity to cash in on those larger rewards.
Do yourself a favor. Get to know your altcoins and which niche altcoins are best suited to your needs and interests.
Learn to Work the Cryptocoin Exchange
You can’t work the cryptocoin exchange if you never properly learn how it works.
No time to learn like the present.
Check out the blog for a range of tips on how to make the cryptocurrency market work for you, like this post on how to get free coins, or this post on how you lost $1,100 in free money (for shame, sir, for shame).
Got a cryptocurrency question that isn’t answered here? Head on over to the contact page to get in touch.
This article has been republished with permission from Investment Hunting.