Suggestions for mitigation of risks while investing in crypto

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Assalamualaikum steemians

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How are you? Hope so everyone would be safe and sound just like me as I am also safe Alhamdulillah...

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We all are well aware about volatile nature of cryptocurrency and investing in cryptocurrency can be much profitable and can also give you difficult challenge in the time of loss but there could be some of the suggestions for mitigation of risks when you are going to choose any token for investing so here I am presenting myself with some of the suggestions for all of you hopefully they would be helpful....

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Diversification:

First of all you should keep in mind the point diversification when you are going to invest in any cryptocurrency it means that if you want to invest in Crypto then you should not bound yourself to only one token like you should not limit yourself to BTC or ETH.You can also choose altcoins for purpose of investment.

If suppose in the future any token becomes unstable then you have other options from which you can make profit and compensate your loss.

Portfolio rebalancing

After that next point you should keep it in your mind is portfolio re balancing so it means that there is a need of regular adjustment of your portfolio for the maintenance of your targeted allocation of assets because in this way your investments would remain aligned in a proper way according to that tolerance of risks and goals which you want to achieve in future.

It is important to adjust portfolio after every 3 months at least and you should set equal percentage for every asset in which you have invested.

Position sizing

Position sizing is also important to consider and for this it is important to limit or confined the amount which you have invested in each token or a set for the minimization of significant losses in future so keeping this point in your mind can be helpful for you in prevention of over investment in a single asset.

You can say that cryptocurrency or token which seems to be unstable to you in future you should only set minimum 5% and maximum 10% of your portfolio for that.

Stop-loss orders

Stop loss orders is a great step to follow while you are investing in cryptocurrency because by this you can set automatic selling orders which make trigger if price of a particular asset is falling below then certain or particular price so it would limit significant losses by automatic selling of that particular token.

As an example you can set a stop loss order for Bitcoin if it falls below $30.

Hardware wallets

Hardware wallets should always be used if you have any investment in cryptocurrency because through this when you would store cryptocurrency of line then hacking and theft would not be done.

As an example you can say that you have your tokens in your hardware wallet and someone is trying to hack them but as they are offline so it is free from any unauthorised access.

Reputable exchanges

You should always use well known well established and those changes that are regulated and that most of the people know for the minimization of counterparty risks.

As an example I can say If I have my assets at binance and Coinbase or any other reputable exchange like this then my assets are definitely safe and secure from any counter party risk.

Research and due diligence

It is always important to have a proper research and investigation about any project or any token in which you have in Idea or about which you have a thinking to invest so for this you should always make technical and fundamental analysis.

I am working at steemit platform which is of STEEM blockchain and my assets are also locked in form of STEEM power so it means that I have a trust and understanding about this blockchain that it's fundamental and technical analysis both are strong and this is a vibrant and growing community that's why I have invested my tokens in it.

Regular monitoring

You should regular monitor through real sources that what is going on with the market trends so there is a need to stay up to date with authentic news so that you may set your strategy according to trends.

As an example I can say that recently there was a war between Israel and Iran we all know due to which market trends was declining so I set my strategies according to that.

Dollar-cost averaging

If you are going to invest some particular and fix amount of money at regular basis then whatever is the market performance you should never think about that because it would be helpful in reduction of impact of volatility of market.

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Risk assessment

You should have an understanding and idea about personal risk tolerance because if you would not have an idea then you would be unable to adjust your strategy according to that so suppose if you are at risk then you can allocate little portion of your portfolio cryptocurrency.

That was all about some of my suggestions and strategies that you can implement without any risk involved because all these are those strategies I have explained that also have practical implementation and example so there is nothing new in it so you can easily go for all these things if you want to take any decision related to investing in cryptocurrency.

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Thanks

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