Crypto is a lucrative market for newcomers to invest in. The never-ending hype, screenshots of exponential gains circulating on social media, and increasing involvement of institutions are some of the key reasons behind the increased interest of newcomers in digital assets. However, crypto can be intimidating for newcomers if things don’t go right. In the times we are in, trading in crypto can be extremely tricky for newcomers. The global crypto market cap is below the $1 trillion mark for the first time since January 2021. Bitcoin is trading around the $20,000-mark. Millions of dollars have been lost due to the crash. Therefore, you must be cautious while trading in such times to avoid getting rekt.
If you are a newcomer who jumped into the crypto bandwagon just before this crash, you need to survive it effectively. The priority should be to save your capital and survive this dump. Instead of jumping in random trades amidst extreme fluctuations, you should focus on understanding the market. Understanding the fundamentals is critical to predicting future moves. This helps in planning trades and avoiding getting rekt. Rekt is a crypto slang that means losing all the funds in one trade due to unfavorable market conditions. Sounds scary, right? But we are here to help you prevent your capital.
Tips To Avoid Getting Rekt
- Book Your Profits Regularly: Remember, unrealized profit is not profit. Once you enter a trade and the position turns profitable, make sure that you book the profit. Greed is the enemy of gains. So avoid being greedy and cut either a fraction of or the entire position in profit. As an investor, you need to understand the power of compounding. Profit from one trade can be put into another trade, and you can make substantial gains in the long term.
- Keep Your Ego Aside: Emotions and Investments belong to two different places. A lot of crypto decisions by newcomers are based on the hype of social media. You see someone posting screenshots of exponential gains while you have just lost some money, and you think you can cover up by entering another trade. Ego trading can be fatal and result in you getting rekt. You need to figure out what went wrong with the trade where you made a loss before proceeding to the next one. Crypto is a high-risk, high-reward game, and you must be mindful of the risks to avoid getting rekt.
- Hype Is A Trap: If your sole source of knowledge about the crypto industry is social media, you need to change it now. The crypto community of social media comprises paid influencers, scammers, and marketing agents. Their job is to sell a crypto project, and they often use hype as a tool to attract more users. Promises of unrealistic gains can be deceiving. As an investor, you need to analyze a project before putting your money into it. Hype can’t be the reason for investing in a project. Fundamental and technical analysis of a project is important to avoid getting rekt.
- Avoid Margin Trading: Margin trading is a double-edged sword. Yes, the chances of making exponential profits in a short period are high. But so are the chances of making losses. Seasoned traders use margin trading as a tool for compounding. But for beginners, margin trading is a recipe for disaster. You can lose your entire capital in a short period. Such a loss can negate all the previous gains, leading to liquidation. Therefore, carefully assess the risks in margin trading before jumping into a trade.
- Stoploss Is Your Best Friend: In the bear market that we are in, risk management is extremely important. The crypto market operates round the clock, and overnight dumps are common. As an investor, it is almost impossible to track the portfolio all day. Therefore, you need a mechanism to manage your risks and cut your position in case of a sudden dump. Stoploss is such a mechanism. Trading without stoploss could lead to huge losses. Hence, you must always have a stoploss in place to avoid getting rekt.
Conclusion
At present, there is extreme fear in the crypto market. While we all are here for the long term, it is important to mitigate the short-term risks to sustain. Even if it means staying away from trading for some time. A good trader is not one who trades every day but someone whose proportion of profits is higher than losses. You need to be mindful of all the risks involved in the crypto investment and manage them effectively to avoid getting rekt. Crypto is an ocean of opportunities. But it is a combination of uptrends and downtrends. As an investor, you need to track the market movement effectively to minimize the losses. It is a game of profit and loss, and you must always try to be in profit.