Hello Stemmians, with all the negatives on the market today I figured I would make an article on managing risk for Cryptocurrencies.
As you have probably noticed the price of any Cryptocurrency tends to fluctuate wildly in a given week. Right now we are seeing a lot of blood on the market. But 2 weeks ago most currencies were in the red, what is going on!?
Well consider that Cryptocurrency is still relatively new, heck it isn't even mainstream yet. So there will of course be periods of change. News heavily influences how the market perceives things and with the Ethereum incident a few days ago it makes sense that people would consider selling off and lowering the market values. These occasional crashes and market dips are risks that cannot be avoided, however they can be mitigated by these actions.
Always try to keep up on the news, news can make or break your profits. A couple of the sources I use are : https://www.cryptocoinsnews.com/ and http://www.altcointoday.com/. In addition I select coins that I want to invest in and keep on eye on their website like Ethereum @ https://www.ethereum.org/.
There is always some risk with your investments... When you invest in a coin you are taking a chance that the coin might crash or lose value. You should never invest everything you have into a coin as the Billionaire J.R. Simplot said "never spend your taw" meaning never spend what you need to keep playing the investment game.
But where there is risk there is opportunity. You and I invest in Cryptocurrency because we believe that the value will increase and for the most part we have seen some impressive growth across the board over the past months. This reduces the risk of investing because we can see that dips and crashes have happened before and the market tends to not only recover but surge ahead in value. Last time we saw a dip like this in Ethereum where it was around 250 dropping to 130, it then rose up to 400$ each. Now anyone who bought as much Etherum as they could when it hit 130 would still be WAY UP on their money even with this dip.
Time is important. If you are expecting that Cryptocurrency will be a get rich quick scheme you will likely be sorely disappointed. Just because you saw a currency rise 400% a month ago doesn't mean it will do that again tomorrow, you have to watch the market and that takes time. There are a lot of bitcoin millionaires out there, what made them rich more than anything else was time... They bought bitcoin when it was almost worthless and held it for YEARS until now it is worth thousands a coin. So when buying your coins consider holding them and letting them mature with time before you sell them. Also don't be quick to sell off everything when you see a dip as you can end up losing money when the market swings back.
Finally be sure to back up your wallets... I cannot stress this enough. I have heard so many horror stories of people losing their computer or wallet and being unable to get access to their coins. Print out your backup phrases and lock them up!
Thanks for Reading.
