Expert Cryptocurrency Weiss Ratings, Villaverde Juan (Juan M. Villaverde) brought six rules to help avoid the many pitfalls of cryptocurrency trading. Their “commandments”, Villaverde shared with subscribers of the subscription rating Agency, and the editors of CoinMarket.News, in turn, shares with you in our exclusive translation.
I hope you learned a lesson from our past release into the environment — nobody can rig the market for themselves.
Aside from the obvious schemes, “pump”, which can be seen a mile away, the best strategy for private investors to trade primarily prudently and wisely.
In the long term, large institutional investors successfully trade because they adhere to the principles of investing. Because they have a plan.
And it helps them to increase the chances of success in the future, whether they are whales or fish.
And if you want to achieve the same investment here are six commandments that must be followed.
Learn to see the risks
We should never forget that cryptocurrencies are immature asset class with high risk.
Some cryptocurrencies from our rating received high marks for the technological component. Other relatively widely used.
But no cryptocurrency has not received a high evaluation in the category “security investments”. Almost all of them in this case are regarded as weak or very weak.
This is why bitcoin got a C+. And that’s why none of the asset have not received [the highest grade ] “A”.
Don’t get carried away buying
The worst time to buy assets is when a whole crowd of people trying to do the same. For this reason, we highly recommend our friends not to buy the bitcoin just before a peak in December 2017.
This is one of the reasons which we have given bitcoin a rating of “A+”, while the whole cryptocurrency industry is screaming: “Buy! Buy! Buy!”.
Wait till the hype calms down. And even better — wait for the bull market will inevitably come under pressure.
Don’t spend more than you can afford to lose
Maybe too obvious, but many beginning investors prefer not to think about it.
Their solution is based on the assumption that they supposedly know exactly how the market will behave next. But if that were true, why not mortgage the house, sell the family silver and even invest all the funds in a particular asset?
The truth is that no one can know exactly what will happen in the future. In the best case confirmed the forecast will be a reasonable guess. It is therefore necessary to rationally realize that it is impossible to be too confident in one asset class, especially if the risks are great.
In General, we always recommend not to invest more than 5% of liquid assets in cryptocurrency. Our brokerage service Weiss Cryptocurrency Portfolio invested in the appointment of only half of this figure.
As for the other half, we carefully waiting for two things: first, major transactions, and secondly, a signal of the beginning of a trend on the rise. We already know about the first, but so far we don’t see anything pointed out on the second.
Never take that loan for investing in cryptocurrency!
Some have no problem with day trading, for trading almost all of your portfolio with twenty times the leverage. In practice, this looks like a dollar, 5 cents of which is yours, and the rest 95 — somebody else’s.
Personally, I have always tried to follow for a more reliable way. For me it is better to leave in small plus, but to avoid huge losses.
How to recognize high risk among your investments? If people have lost the peace because of their investments is a sign of excessive investment. Another red flag: he can’t look away from the screen?
Solution: to reduce time monitoring the market.
Ignore the media!
Journalists work “in the course of the play.” If the market is agitated, most will be positive headlines. When hell comes, all the pessimists come out of nooks and crannies and there are more negative headlines. Thus, guided by the headlines — it’s like that follow the crowd, “buying at the peak and selling at the bottom”.
Some of the most striking examples:
Now it is often possible to hear opinion that “bitcoin does not solve real problems.” In addition, the news was overwhelmed with stories about what the government can “make cryptocurrency disappear”.
At the same time, in the period of rise in the role of the media were diametrically opposed. Just had a conversation that about how bitcoin and other cryptocurrencies (so-called “altline”) should replace Fiat money and become a global reserve currency.
Fact: news moving the market and quotes, and not Vice versa.
My advice is to ignore them.
Buy assets with better technological base and a large penetration
In the long term, only these two factors will play a role.
Currently, assets with the highest penetration rate, according to our rating are BTC and ETH. At the same time, a better technological base — EOS and ADA.
So what is the result? Absolutely true that surely this period of consolidation will enrich many investors, bringing rich fruits of their investments.
But they get rich not because fry was forced to give up their positions. On the contrary, the latter are quickly jumped into the network of their impatience.
What about the expression “in the ocean just enough space whale”? Let me remind you that most of the cryptocurrency is now trading at rates which the market was not since the beginning of 2017!
Whether small investors? No. They just swim around in search of the exit. Essentially, it all boils down to this: don’t fall for those who promise you easy money. The trader’s Glossary the word “easy” in principle, no.
But there is nothing difficult to stick to proven principles of investing. Just need a little discipline.
With best wishes,