The beginning of 2022 has been a rollercoaster ride for crypto traders in the wake of the bearish trend that has gripped the market. The extreme volatility in the prices of cryptocurrencies is not just limited to Bitcoin but spreads across all major altcoins as well.
A bear market is a period when the price of an asset or group of assets declines. Such periods are often characterised by pessimism, financial risk aversion and negative news, as well as general uncertainty.
In a bear market, the majority of traders are on the losing side, but those who adopt the right strategies can reduce their losses and increase their chances of making money even in this difficult environment. While it's natural to feel panic and fear during a market downturn, traders must be able to control themselves and not succumb to emotions.
In this article, we'll explore some of the ways that traders can protect their funds and make sure they're still able to make profits when the market turns around.
Here are some tips on how avoid losing money in a bear market:
1. The first step is acknowledging that you're not alone.
It's easy to think that everyone else is winning while you're losing, but that's rarely the case.
You might be tempted to hide your losses from family and friends, but being honest about what happened will help you get past it faster.
2. Cut Your Losses Early
The first thing you should do if things go south is cut your losses. If the market has been drifting downward for more than two days, it's time to take action. Sell off your positions and take whatever losses you incur. Don't let them compound any further by holding on to an asset that keeps losing value over time.
3. Check your trading plan regularly.
A trading plan is a set of rules that help you make the right decisions when things are going badly. It is essential for any trader but especially for those who trade in bear markets. In a bull market, day trading is easy because you can make money quickly and easily by catching uptrends early on and riding them until they end.
However, in a bear market, day trading becomes more difficult because you cannot predict whether prices will go up or down after you buy a stock. Therefore, it is even more important than ever to re-evaluate your trading strategy at least once a week to make sure that it is still valid and working as expected.
4. Leverage on pullbacks
Take advantage of pullbacks to increase your holdings in promising cryptocurrencies that have been heavily oversold during the previous bull run or by recent negative news events. This strategy can lead to significant gains if these coins recover quickly after their recent declines, which is often the case during bear markets.
5. Do not trade more than you can afford to lose.
This rule applies not only in bear markets but also in bull markets. When things are going well, it's tempting to take on more risk because of the higher potential returns; however, this can lead to bigger losses if something goes wrong (which it will eventually). Thus, it's important to take caution even more in the bear market.
6. Keep your emotions in check.
Emotions such as fear and greed affect our decision making process and lead to poor decisions when placed under stress situations such as those experienced during market downturns.
7. Keep a Close Eye on Technical Indicators
Traders should also keep a close eye on technical indicators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence). These indicators will help you see when an asset is overbought or oversold, which makes it much easier to get out before any major losses occur.
8. Leverage on referral schemes from crypto communities
You may have heard about referral schemes in other industries and how they work. This also applies to the crypto space. The Cordialexchange community has taken this idea to another level and created referral programs where you can enjoy cashback and other perks through every referral that completes their trades through your link.
The best part about leveraging this kind of project is that it does not require any investment from your end; all you have to do is follow the referral instructions and enjoy instant withdrawals from your cordial wallet.
How have you been holding up in the bear market? We would love to hear your thoughts! Join the conversation 🚀🚀
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While it's natural to feel panic and fear during a market downturn, traders must be able to control themselves and not succumb to emotions.