5 Ways to Become a Confident Crypto Trader [Best Practices 2022]

The Bitcoin and cryptocurrency markets have undergone multiple cycles of rising and decreasing since their beginning in 2009, even within the wider continuing patterns known as bull and bear markets. While each market fall has been followed by a comeback and strong increase so far, moments of the downturn may be stressful and difficult to manage for both experienced traders and new investors. Here are five ideas to consider during a market downturn to preserve the value of your portfolio, prevent emotional trading, and sleep better.

Look at other trading opportunities

If you know where to look, there are possibilities, even when the crypto prices are dropping. Whereas some envision a dark and bleak crypto winter, others see a fresh window of opportunity to buy their favourite assets at a bargain and profit.

Traders who feel priced out of recent gains might enter the market or enhance their holdings by “buying the dip.” If you feel like buying crypto during this situation, it is also advisable to become a crypto trader to choose safe platforms as it lessens your worries and eases your troubles. Bitcoin Evolution does this by connecting you with professional brokers who are well-versed in the crypto industry. Find out more about Bitcoin Evolution’s trading software.

Even in decline, the market will vary, and there will be tiny peaks and troughs. Traders who brush up on their technical analysis abilities will gain from this, as they will be able to foresee these short-term changes and profit from them by buying the lows and selling the highs.

Create a trading plan and trade within your capacity

You should never invest more than you can afford to lose, regardless of how sure you are about a certain item. The last thing anybody wants is to be trapped on an emotional rollercoaster as their portfolio’s value progressively declines, hoping for favourable price activity.

Cryptocurrency, it’s been claimed, never sleeps. Cryptocurrency markets are notorious for their volatility; therefore, crypto investors should plan and identify their trading methods and their entry and exit points, if feasible.

It’s easy to get carried away when it comes to volatile assets like cryptocurrencies. Trading is a high-risk activity, particularly in a down market, and investors should create objectives that balance reducing possible losses with maximising potential returns.

Think of the long-term

Over the long run, Bitcoin has continuously trended higher. Even if prices are decreasing due to a momentary market correction or a lengthier bear market, history teaches that prices will ultimately rebound due to economic causes like scarcity. Many people assume that the price of cryptocurrencies such as Bitcoin will continue to grow over time because of the limited supply. Negative price movement might be considered transient if your investment period is longer (years rather than weeks or months). Long-term holding has shown to be a successful approach, with Bitcoin emerging as the most successful large asset of the previous decade.

Know when to buy and take profits

Converting part of your risky crypto holdings for more stable assets is one of the best ways to minimise crypto volatility and protect yourself during a market downturn. In a cryptocurrency bull market, this may assist an investor ‘lock in’ their balance, reducing risk and the need to actively manage their portfolio and stress levels.

Stablecoins, such as USDC, strive to retain their value at a fixed price, and switching a portion of your portfolio to stable-value assets reduces your exposure to price fluctuations when markets are quiet.

But keep in mind that selling everything at once, a practice known as capitulation, may easily result in crypto holders losing money if the market unexpectedly recovers. This is why, before you’re forced to make judgments under duress, you should sketch down a rough concept of what degree of profit and loss you’re okay with.

Avoid falling for FOMO and FUD

While keeping up with the newest news and developments in the cryptocurrency field is critical, having too much knowledge may be detrimental. This is particularly true during market downturns when it’s all too easy to let your emotions get the best of you and make some poorly timed transactions.

Fear of missing out (FOMO) and FUD (fear, uncertainty, and doubt) are familiar phrases in the crypto world, and they may have a bigger impact on our buying and selling decisions than many of us would like to acknowledge.

FUD is a term used to describe bad market sentiment produced by a rumour, a negative news story, or a notable individual expressing worries about a certain market or asset. As traders sell their shares in anticipation of additional price declines, this might hurt the price. FOMO is for “fear of missing out” and refers to a trader’s propensity to get carried away with wishful thinking after witnessing favourable market movement or news, often neglecting fundamental indications in their eagerness to board the next rocket ship to the moon.

Remember that no one can foretell the future, and no one’s counsel is more valuable than doing your study and drawing your conclusions.