It’s hard, and sometimes really painful to watch how crypto assets fall before your eyes, but this does not mean that you should fall along with them. Here are the best 4 things that are important to know in difficult times for the crypto market.
1. Buy cryptocurrency on the way down, using the dollar-cost averaging (DCA).
When markets become wildly volatile, it is important to have a reserve of fiat currency or stablecoins, which are an opportunity to “buy the dip”. And when prices return to their previous highs, buyers during the fall could get a good profit.
2. Use indicators to find the best entry point.
A popular method is to use the Relative Strength Index (RSI) indicator. This tool consists of two key elements:
Oversold (A):
When the indicator line breaks below the channel, the asset in question is considered “oversold” or undervalued and usually signals an imminent price increase.
Overbought (B):
When the indicator line breaks above the channel, the asset in question is considered “overbought” — in other words, overvalued — and usually signals an imminent price drop.
3. Diversify your investments by splitting funds into various crypto assets.
It is difficult to calculate which of the more than 17,000 cryptocurrencies will rise or fall.
One way to hedge your bets is to distribute your funds across various crypto assets. This will require reducing the size of your trades, but at the same time you will reduce the overall risk.
Of course, it is not enough to randomly select crypto assets and invest in them. First, you need to conduct a thorough comprehensive verification of each crypto asset that you are going to buy. This requires continuous research, but learning, you will become more prepared to navigate the market’s highs and lows.
4. Be cool and stay calm.
In fact, this is the most difficult thing from this list that needs to be mastered.
Fear and greed, along with the lack of experience, often lead traders to mistakes and wrong conclusions that lead to heartbreaking losses.
The cryptocurrency market is quite volatile, and if you missed the opportunity to buy the dip, do not worry, for sure on the horizon, you will be given more than one chance to enter as the market has cycles. Make sure you take your profits, and you have a reserve capital in case the markets go down, and don’t forget to keep cool when the bears come.
LATOKEN crypto exchange does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Like other assets, cryptocurrency is subject to market risk. Please do your own research and trade with caution.
