The Sky Is Falling!
If you are new to crypto there is a good chance you are freaking out right now. The markets are crashing, your entire portfolio is red, there is blood in the streets and you want to sell sell sell before you loose everything!!!
Take a deep breath...relax.
Everything is going to be okay
Markets go up and down, it's perfectly normal and they will recover like they always do.
Zoom out a bit and have a look at the daily candles (or weekly candles if the coin has been around long enough). As long as you have done your research and you have chosen coins that are backed by good teams with good ideas you have nothing to worry about.
Jump on Coin Market Cap or TradingView and have a look through the historical charts. Dips like this happen every so often, for a range of different reasons...but the panic eventually subsides and the price continues to climb.
But why did it fall??
There are a range of things that can cause the price to drop...this time it was news out of China. The Chinese government is making moves to regulate cryptocurrency and ICOs. It's really not that big of a deal!
People generally don't like change, it's a fact, and this news created uncertainty. Combine uncertainty with money and you get a whole lot of fear (just like the fear that probably brought you to this article). A few people started selling their coins thinking the sky was going to fall, which caused a dip and made more people do the same. Suddenly there is mass hysteria and big, scary, red candles everywhere.
Don't get caught up in FUD and FOMO
Fear
Uncertainty
Doubt
and
Fear
Of
Missing
Out
Both of these things will be your worst enemy in trading. Don't follow the crowd!
There is a statistic that says something like 95% of traders will fail.
You want to be in the 5% who don't? Just do the opposite of the majority!
If people are panicking and selling then you should stay calm and think about buying.
If people have FOMO and they are buying then you should stay calm and think about selling.
Bag Holders, BTFD and HODL
You may have heard these terms thrown about...let me sum it up for you.
A bag holder is a person left holding coins when the value has plummeted and there is no chance of it recovering.
If you bought a coin and the price dropped, well that does suck but it's not necessarily the end of the world. As long as the coin you picked isn't a dud (yes dogecoin, I mean you) then it's going to bounce at some point and go back up in value. You just have to be patient and wait it out. You only lose if you sell for less than you paid!
Buy
The
F##king
Dip
This concept is pretty simple... let's say you buy 100 coins at $2 each, costing you $200 total.
Suddenly the price falls to $1
You just lost half of your investment! Should you pull out the rest and cut your losses before you lose it all? No way, just BTFD!
If you buy another 100 coins at $1 (let's call them your dip coins) you now have 200 coins and you have paid $300 total. If you average it out that means you got 300 coins at $1.50 each.
Now just wait for the coin to go back up to $2 and sell your dip coins. They cost you $100 but you sell them for $200! This means you still have the original 100 coins but now you have only paid $100 total.
Instead of freaking out and selling at a loss, you bought the dip and lowered the price of your original investment. In this case those coins only cost you $1 each! Nice!
If the price dropped again (to say...$0.50) then you just buy even more. When the market goes back up and you sell your dip coins, you will be in an even BETTER position!
Please remember this strategy only works with coins that are going to do well in the long run. Hopefully you have done your coin research, read the white paper, checked out the team and believe that the project is going to be a success. If that is the case then you have nothing to worry about!
Good things come to those who wait. If you don't have any money left to BTFD then you just need to have faith in your investment, be confident with the research you have put in and simply... Hold On for Dear Life!
Be patient, stop looking at the charts every 5 minutes and go do something constructive. It will bounce back and you will be so happy you didn't make any decisions based on fear.
To bake a cake you have to break a few eggs!
So make sure you have backup eggs, and don't keep them all in the same basket!
Never go "all in" on a coin, no matter how great you think it is. You want to diversify your portfolio so if one coin completely fails you don't lose everything (including your sanity and will to live).
Buy a little bit at a time and you'll be just fine
I know how strong the impulse can be to buy when a coin is taking off. Everyone is talking about it and there are big green candles as far as the eye can see...but don't get caught up in the FOMO because 9 times out of 10 it will drop back down before it continues climbing at a steadier pace.
The best way to even out the risk is buy some now and buy some later. I find 33/33/33 works well.
If you plan to invest $100 in a coin buy $33 worth now and then wait a little while and see where the price is heading. It might go up, it might go down! Then buy another $33 and wait again...and finally buy another $33 and hopefully by doing this you managed to buy a better position than you would have if you jumped on the FOMO train.
Obviously this won't work to your advantage every time, occassionally there are coins that are going to the moon no matter what, but in the long run this is a good strategy. Stick with it to save yourself some money!
What about the other $1?
Oh, will you look at that! You have an extra $1 left over because you took my advice!
Well if you found any of that helpful and wanted to send that $1 in my direction to say thanks...it would be rude of me to say no!
I'll post my Ethereum and Bitcoin addresses here just in case.
BTC - 15GDfQY6Xy6uxbVtpSu41krzy1vpZRUxLX
ETH - 0x720655eea5706724fb99e2c79976b09af31d8219
Until next time...