Risk management in cryptocurrency and stocks
Seeing a stock or a cryptocurrency rise, is a great feeling. Your investment is worth more without doing "anything" (ofcourse you first need to do research and invest your money, etc..). Then again, it's a terrible feeling when your investment drops and you lose a bunch of money. By applying risk management, you protect your investment.
You might think that earning money in stocks or cryptocurrency is easy, just buy low and sell high. But timing the market is one of the hardest aspects of investing. You may get emotionally attatched to your stocks which is a bad thing. Try to invest without emotion.
buying
First of all, do not invest money that you can't afford to lose! Choosing a security to buy with your hard earned money seems easy, but there is an abundance of different kinds. First you need to do some fundamental analysis. Do your homework and research some securities which you might find worthy to invest in.
Spread your investment throughout different securities and sectors. Don't invest 100% of your money at the same time! Many people have money on their investing account and have it 100% invested, all of the time. You might consider going for a certain amount in fiat from time to time.
Buying low is very important. With technical analysis you may have a higher chance to buy at an optimal moment. RSI trendlines, MA, MACD and many other indicators can be used buy at the most optimal moment. Placing an limit buy order gives you the advantage of not having to track the market 24/7.
FOMO (Fear Of Missing Out) is hard to avoid. If a security is rising and getting exponentional, it's propably a bad moment to get in. Having patience is very important because letting your emotions doing the buys, could lead to losing money. People with FOMO bought bitcoin around $ 20k. If they were patient, they could have used the same amount of money to buy the double amount of bitcoins, just 1 month later.
Selling
People tend to get greedy when it comes to taking profit. They just want more money. At some point the security drops and your investment is worth less. Every investor propably thought of the following sentence at least once. " Why didn't I sell at the top." It is hard to time the market, that's why you got to protect your profits by selling a certain percentage of your investement. Don't sell 100% at once. For example: If your security goes from $100 to $150, you could sell 25%. If it goes higher, you could do it again and again...
Sometimes a security might crash. People tend to sell when the losses are getting emotionally to big. Eventually they sell and right afterwards, they see the security rising again. They buy back in high, and it drops again. Protect your investment by using stop losses.
I just want to give my humble opinion on some products by doing technical analysis. There may be some minor and/or major flaws. Nobody is perfect and I'm willing to learn from my mistakes through your opinions. Thank you.
Money making posts:
https://steemit.com/money/@bo3ia/how-to-make-money-in-stocks-and-cryptocurrencies
https://steemit.com/money/@bo3ia/make-money-with-the-s-and-p500-index
Image source: https://www.tradingview.com/
Disclaimer: This is not financial advise.