When investing in cryptocurrency, every investor wants the purchased asset to grow in value and bring profit. However, no one can foresee to what point an asset can go up in price. That’s why the majority of investors use the well-known, effective and simple break-even strategy. Read on to learn how this strategy works.
Averaging
If you invest all the deposit in one asset, it is highly likely that the entire trade will go astray and you will suffer losses. Afterwards, it will be troublesome to try making things better. You have to wait for the asset price to go up, or close positions at an unfavorable price. Buying the asset by installments will level out such risks.
This strategy is called averaging. If you decide to invest in cryptocurrency, for instance, 100 thousand rubles, then you should divide the amount into several parts and gradually add them. It is impossible to predict exactly how an asset will behave in a week after investment. Still, if you stick to the averaging strategy, you can always buy more coins when their prices drop.
It is by no means a super effective and win-win strategy, for it may occur that the asset starts to appreciate so you have to buy it at a higher price. Nevertheless, you can protect yourself from losing your initial capital, and the profits from the first purchases made at a lower price, will compensate for possible losses.
Asset diversification
It is entirely possible to invest all of your funds in only one particular asset. Do keep in mind that this will also increase the risks. It is, thus, essential to diversify your investment portfolio. What this means is that, when investing, it is best for you to have several different assets in your portfolio, such as stocks, cryptocurrency, precious metals and others. This is especially relevant during a time of rapid growth of startups. In such a market it is impossible to predict the success of any given project, so you should protect yourself against losses through diversification.
Diversification makes a lot of sense for users concerned about the decentralized finance (DeFi) sector. This is a growing industry with a lot of risks. Most projects are vulnerable to hacks, which leads to a sharp drop in the price of their tokens. Another issue are exit scams. That’s what it’s called when developers abandon projects and, having deleted all their accounts in social networks, disappear with the money of investors.
Stop-losses
One of the biggest fears of investors is to lock in losses. Always calculate the best time to sell a digital asset and to get out of a position. There are plenty of examples where a trader bought assets and then lost everything because they tried to wait out the rate drop for too long.
Even if there are preconditions that the rate will continue to fall, it is crucial to close unprofitable positions. The most powerful tool at this point is a stop-loss.
Stop-losses also help to reduce the influence of your emotions during trading. Newbies often let themselves get caught up in panic, fear or greed that lead to the loss of capital. Sometimes it’s harder to get out of a position in time and admit a mistake than to keep watching the price go down. Stop-losses help you avoid hesitation in such situations by thinking out a deal plan in advance and placing an appropriate order to avoid serious losses.
Another advantage of stop-losses is that it’s not necessary to monitor the market 24 hours a day. Imagine if you bought some bitcoin and its price surged, you can set a stop-loss on the entry point. As a result, even if the coin’s price drops while you sleep, the exchange will automatically sell your assets without any loss.
Conclusion
Both beginners and experienced traders can benefit from applying these strategies. If you leave everything up to fate, you may easily end up finding yourself without a deposit or being in the red.
But in order to trade the top cryptocurrencies on various exchanges, we can recommend a trader’s assistant, a trading bot. One of the leaders in this sector is the RevenueBot platform. Use RevenueBot to earn a stable passive income. The platform allows you to create trading bots on the top cryptocurrency exchanges such as: Binance, Bittrex, FTX, OKX and others. The creation of the bot is completely free, a commission is charged by the platform only after the first profit has been made. There is one thing to take note of right away: the bot does not have access to the user’s funds on the exchange, it trades using API-keys, which means that the exchange account will remain out of access. RevenueBot has over 40,000 customers who make money thanks to its trading bots.
The following is, however, not an exhaustive list of the advantages offered by our platform:
- The commission fee is charged only after the user has made a profit;
- The bot settings open up a variety of ways to make a profit;
- RevenueBot has a marketplace where customers can buy a ready-made bot so they don’t have to create their own, or they can also sell their own bot if its configuration has proven to be effective. Furthermore, users can acquire in the marketplace the services of a mentor (an experienced user of the platform), who is ready to answer questions from beginners. Over time, you can become a mentor yourself and earn an extra income from it.
- Regular updates of the platform’s features, which optimize the trading process.
- The RevenueBot referral program allows you to earn money without having to trade. Refer new clients to the platform and you will get up to 30% of the platform’s commission on all profitable transactions conducted by the new user attracted by you every month (but no more than 15 USD).
As you can see, the platform has quite a lot of advantages to offer, all you have to do is start trading. There is no need to list them all when you can check everything yourself through RevenueBot’s official website. It is strongly recommended that you decide quickly, because the crypto market does not stand still, it grows by leaps and bounds. If you hesitate to come and start trading with RevenueBot, who knows how much profit you are missing out on?