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Managing Risks in Cryptocurrencies

Ever since Bitcoin was first invented, the world of digital currencies has changed, making way to hundreds of cryptocurrencies. Managing these cyber commodities can sometimes prove to be a hard thing to do.

Giants from both tech and financial sectors that had once disregarded cryptocurrencies are now making huge investments in the industry. But seeing as the digital coin and token industries are still in their early stages, it is no longer surprising to see that it still is in a very volatile space.

Trade12 - Risk with illustration on chalkboard

Illustration of Risks written in chalkboard next to a coffee cup.

The occasional crashes and market dips that happen are things that you cannot avoid.

Read more about the risks and opportunities of investing in cryptocurrencies.

But we can help you manage such events with these following actions.

  1. Keep up with the news

Prices for any cryptocurrency tend to fluctuate wildly in a given week. One of the factors that hold heavy sway over these volatile changes is the news.

No matter how busy you might be, it’s vital for you to at least try to keep up with the current events. News can help on managing or determining whether you will make or break profits.

Knowing everything that happens to the coins you choose to invest in is as important as knowing why you invested in it in the first place.

The current events can assist you on deciding whether you should stay with your cryptocurrency investment or sell it now.

  1. Don’t give everything

No matter what kind of investment you get involved in, there will always be risks.

When you invest in a coin, you decided to take a chance on the possibility of it crashing or losing value. Investing on anything, especially these digital currencies, should always be thought hard on.

You should study up more if you think that there are still unknown risks that put you in bad positions. It’s important for you to know that you shouldn’t put everything you have in any investment.

Trade12 - people huddled together talking

People are huddled together, discussing the graphs and data they have gathered.

  1. Be vigilant

You should always know what’s going on around you.

Aside from the news, the people around you are also great sources of knowledge. You should not completely disregard their opinions or the things that they were able to glean from other people or news circulating in the market.

Though not always right, having other people’s input regarding your investments can actually help in managing some of the risks that investing brings in.

  1. Be agile

You should be able to make quick decisions once a crash in your investment comes along.

Your emotions might get in the way but that will be a fundamental mistake that you should avoid. Getting emotional over a failed investment will only hinder your logical judgment and make you hold on to something that no longer has any value.

Be quick on your feet and there will be little none that can surprise you.

  1. Know what’s relevant

It’s imperative for you to know why you decided to first take on the digital currency investment road.

What lured you in? Did other people have a say in your decision? What made you stay? Are things going well for your investments? What does the news say about your digital coin’s future?

These are some of the questions that you should be able to analyze and answer for yourself when it comes to managing the possible risks that a volatile, new market brings.

  1. Time can either be a friend or a hindrance

Whenever you hear people say that time is gold, know that it’s true.

Time is important when it comes to investing. In terms of cryptocurrencies, if you think that it will be a “get rich quick” scheme, then you will be disappointed. Just because you saw a currency rise 400 percent last month, doesn’t mean that it can happen again by tomorrow.

There are quite a number of bitcoin millionaires in the world. But what made them get to where they are now is time. They bought bitcoins back when they were still basically worthless and took them years before reaping what they’ve sown.

So when buying your coins, know that you should also let them mature with time. Also, if you see a dip – a small one – don’t be quick to sell off everything. You might end up losing money when the market swings back.

Trade 12 - Cycle of Risk Management

A chalkboard with the cycle of risk management written and illustrated on it.

  1. Always back-up

Do not ever forget to back-up your wallets. And don’t think that it’ll be a waste of time to double check the address you input in every single transaction.

A lot of people have lost their computer or wallet and were no longer able to gain access to their coins.

Print out your backup phrases and lock them up. Remember, it’s better to be safe than sorry.

Read more about Understanding the Risks in Cryptocurrencies.

 

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!

Cryptocurrencies: Pros and Cons

Investing in cryptocurrencies is definitely a gamble. We have just listed some cryptocurrency pros and cons.

Investing in cryptocurrency ICOs may be a huge gamble, so you need to know its pros and cons.

Investing in cryptocurrency ICOs may be a huge gamble, so you need to know its pros and cons.

Just like other kinds of investments, they can give you huge returns. But they also come with great volatility and risk. Nonetheless, it is an investment you wouldn’t want to ignore.

In other words, if you plan to invest on cryptocurrencies, you should be armed. You should know the basics, and you should know the pros and cons of your investment.

In this article, we have listed some of the pros and cons of diving into cryptocurrencies. Read on!

Trade12 review blog - cryptocurrencies have their cons that many investors value.

Cryptocurrencies have their pros that many investors value.

Let’s start with the Pros of CryptocurrencIES.

Number 1: Huge Potential for Returns

According to data, the $1000 invested in Bitcoin in 2013 would be worth over $400,000 today. Sounds good enough?

That figure has convinced many investors consider investing in cryptocurrency. Should you be one of them?

In a short span of time, ICOs have given large returns. Stratis was able to raise $600,000 in their June 2016 ICO. The price has risen 63,000 percent.

Spectrecoin raised $15,000 last January. They have witnessed a whopping 13,000 percent rise.

Number 2: Increased Liquidity

If you purchase equity in a startup, you need someone to buy it from you. Or you can wait for an acquisition or an IPO (initial public offering). That is, if you want to realize your profit.

In simple words, if an ICO (initial coin offering) can build a solid network, you as an investor have much more liquidity. Plus, you can sell the cryptocurrency for dollars almost right away.

Number 3: Clear Direction

Comparing startups with cryptocurrency ICOs, we find out that startups need overcome initial headwinds. As a result, they usually have to pivot many times.

You also expect that the startup will be vastly different from when it was founded.

With cryptocurrency ICO, upon investing, you know exactly what they do. You also know what they will do. And because of this, you can accurately and efficiently evaluate the product.

In the end, you can use that insight in determining your investment.

Cryptocurrency has its cons that many investors worry about.

Cryptocurrency has its cons that many investors worry about.

Now, let’s proceed to Cryptocurrency Cons.

Number 1: It is much more volatile

This is a big downside. Compared to the stock market or real estate, cryptocurrencies are much, much more volatile.

There have been different issues surrounding it. There were hacking incidents, and these caused investors to lose ALL their investments in a snap.

Moreover, even if these incidents are quite rare, they’re not actually unheard of. None a few have heard of massive drops in ICO values.

Number 2: Network Stall

The key to a successful cryptocurrency lies in its ability to offer a useful product. The product should attract a substantial number of users.

The danger, then, arises when it fails to attract users. Worse, users may never use the platform. Unsurprisingly, these things will inevitably result to a drop in price.

Due to lack of network engagement, many recent ICOs failed to perform after launching.

Number 3: Possible Mismanagement

If you come to think of it, a cryptocurrency is basically a startup. It is a business, and it has founders running it.

Cryptocurrency needs a solid founding team if it aims to move out of ICO phase. It needs efficient management if it aims to reach mass-market levels.

This should tell you to be careful. Look into the team’s background, and check everything. Evaluate their skill sets, and consider carefully. Check whether they actually and effectively execute the project.

Now that you know the Pros and Cons:

You must be up to date with the options you have. Technology changes and it is never static. Cryptocurrency is technology. Therefore, you need to follow it closely.

With tons of possibilities piling up daily, you must keep up more vigorously.

Additionally, you must remember that though portfolios should be balanced, you also need riskier assets. That’s what makes an ideal portfolio. In this time and age, ICOs sport numerous benefits that venture capital lacks.

Start thinking about ICOs. Start thinking about investing in them. Check what ICOs are currently available, and know how you can use them to generate tremendous returns for you.

You can earn bigger profits and execute better trades here at Trade12 by reading the latest market updates. Striving to become the best forex broker for you, Trade12 reviews daily market events essential to your trading activities to help you improve your overall trading performance. Register an account now and enjoy a wonderful trading experience!