Prepare your strategy for the cryptocurrencies price recovery
For the last three months, we have borne witness to the most exceedingly terrible period in the history of cryptocurrencies. What seemed to be as capitulation two weeks ago, was followed by further selling straight up to the end of the first quarter of 2018. In spite of the fact that no one knows if the crypto market has reached its bottom, it may have passed the dip of “irrational exuberance” phase and it’s entering a more mature phase of its life cycle.
The most important questions that we should ask ourselves right now are: When will this drop in the cryptocurrencies’ prices end? and How do we prepare for the imminent rise in price levels? And the rise is imminent, as the past has already shown us. So the logic approach at this point is to start building a strategy for that time.
Considering the huge amount of emerging ICOs (initial coin offerings), it is almost impossible not to be drawn to at least one of them. You could be attracted either by the data collected from their white paper/website or from other crypto related publications, by their business model or long term prospects of the project. And let’s not forget the financial aspect, you were most certainly attracted by the massive returns the investors were getting during the cryptocurrencies price boom at the end of last year. Yet, due to the uncertainty that surrounds the market these days, many investors or potential investors don’t know what to do.
It is time to re-evaluate the cryptocurrency market and build a healthy strategy for investment opportunities because just buying what media suggests or jumping from one token to another cannot be profitable in the long run.
Strategy investment rules
First of all, if you intend to make any sort of venture or investment, then you should prepare a very strong strategy. Here are some basic, yet demonstrated rules that everybody should work into their methodologies and strategies:
- Do your homework! Research every project before buying even the smallest amount of tokens or coins. Devote time to your analysis and search as many different sources of information as possible.
- Don’t buy a coin just because its price has gone up and don’t sell a coin just because its price has gone down!
- Invest only as much as you afford to lose, not a penny more!
- Build your strategy before you begin trading! You may adjust it as you go, but your strategy has to be prepared beforehand.
- Divide your investments across various industry areas and readjust from time to time!
Managing risk
It is reasonable to state that every investment made will expose you to some level of risk, and cryptocurrencies, by nature, are even riskier than most. When building a strategy for crypto investment, you need to keep in mind the different risk categories or levels:
- Low risk: cryptocurrencies that have been around for a while and are likely to still be around in the following 5 years. They have a feasible utilization and can bounce back after a prolonged period of pressure. Examples: Bitcoin, Litecoin, Ethereum etc.
- Medium risk: cryptocurrencies that seem to be feasible and have already an established network of traders, but are, however, riskier than the ones mentioned above.
- High risk: any cryptocurrency younger than a few months, including ICOs, airdrops, low cap cryptocurrencies and shill coins.
Keeping the aforementioned categories of risk in mind, ask yourself to how much risk can you expose your investment and factor that into your planning.
The market correction that we’re experiencing now was something most crypto enthusiasts were waiting for a long time and, at the beginning of the second quarter of 2018, we can look for more investment opportunities in cryptocurrencies. As long as you keep to a reasonable and demonstrated strategy, even during a market rectification like this, you will feel more confident about your investments.
Original Article Source: CryptoOrders
Disclaimer!
All information found here, including any ideas, opinions, views, predictions, commentaries, suggestions are for informational, entertainment or educational purposes only and should not be construed as personal investment advice. Conduct your own due diligence, or consult a licensed financial advisor before making any and all investment decisions.