These are 4 simple things to keep in mind if you want to trade well in any market conditions.
Surviving a bear market is hard, surviving a bull market is easier but both have their advantages and disadvantages.
Here are some ways to reduce your risk in the markets and trade smarter.
When looking at the rush and huge gains in cryptocurrency, a lot of newcomers to the space have trouble controlling their emotions which often lead to poor decisions.
It is so easy to take a look at a certain cryptocurrency and rush into the hype or fomo in order to buy it.
This pic below is what a lot of people see when they get excited about investing into cryptocurrency. These are gains that you would rarely see in the stock market, with the top 10 gainers in the last 24 hours up 30% or more.
If you take the time to visit these projects website, learn about these coins, and the long-term values of the team, this will help you to avoid rushing into the most pumped coins in the last 24 hours.
2. Don't get to caught up in the fomo
Most of these pumped coins will have a quick decline in a few hours from now, as the investors into these coins before these pumps will likely sell in profit and dump on the new buyers into these projects.
I have only heard of a few of these coins on this last above, and I am able to say that a few of the coins above have weak projects, greedy project teams, or just little demand for the coin other than today. The trade volume will be high one day and very low the next.
These coins that just pumped especially are hard to time your buy-ins. Below is the emotional cycle that a typical trade would go through in a few weeks or a few months. For some this chart will be spread out over the course of the year.
3. Take a look at the trade volume of the coins you want to buy.
It might seem like $84,000 of trade volume for one of these coins on the list is a ton, but in reality the 7 day trade volume for Veros, the 12th currency on the picture above, was likely under $40,000 for the week.
A lot of these coins jump and skyrocket in trade volume which makes you think the overall demand for these coins is high. In reality, most of these coins are the classic pump and dump coins where if you buy in too late you will get rekt.
Taking a look at the trade volume of certain altcoins over a 1 week or more period will give you a better idea of the demand for a coin. I typically look at coins with at least $100k in trade volume on average in 7 days.
The top 10 cryptocurrencies in trade volume is a good place to start your crypto research because these coins have the highest trade volume.
This means that you will should be able to sell your coins easily even if they pump in price.
4. Buy into your favorite coins slowly if possible.
I used to believe that I needed to buy Bitcoin today before it hit $20,000 tomorrow. This is still possible, but more than likely the price of BTC will fluctuate over time providing better times to buy into the coin.
As of yesterday Bitcoin was over $9,000, and recently it fell to about $8,700. If you wanted to buy BTC yesterday, but buy at a lower price you could buy in some at $9,000. Buy some at $8,700 and potentially buy some more Bitcoin if it drops lower. This would bring your average buy in price to about $8,600 instead of buying it all at $9,000 in one large purchase.
Bitcoin and other altcoins pump and dump in cycles, so if you pay attention to the charts and try to time the correct time to buy these altcoins you will likely end up with more BTC and save more money. This article is not meant to be financial advice.
Hope you found this article helpful, and stay tuned for more crypto or Dapp related articles soon.
Be sure to check out DappStats as well for all your necessary Dapp research. DappStats.com