With interest rates rising in the United States and the world starting to emerge from COVID, financial conditions across the globe have tightened. Bitcoin and Ethereum are both down more than 50% from their all-time highs.
The season of “up only,” #cryptotwitter’s favorite term for the bull market, has come to an end.
So, what can you do when things go sideways or down for a bit?
Here are five ideas that may help
Even though it’s difficult, try to avoid obsessing over the loan you could have paid off, the house you could have bought, or the riches you could have been swimming in.
Chasing after this number will likely lead to poor decision-making.
Instead, try journaling about what happened to your investment and what you might change in the future.
Did you not take profits as you had planned?
Did you not leave enough cash on the sidelines for unexpected life events?
Were you listening to the wrong influencers?
Did you focus on a project’s hype instead of its fundamentals?
Did you not have a plan in the first place?
Identifying these decisions can help you make better ones in the future. The first step is acknowledging the problem.
If you’re down substantially from your portfolio highs, you’re likely not going to make it back on one trade.
Yet, this doesn’t prevent people from revenge trading, trying to recover a loss from previous trades in a super short period––and often acting irrationally in the process.
The key to avoiding this is position sizing, adjusting your trade size to fit your account balance. You’ll always risk a set percentage of your account on each trade, no matter how large or small your account is.
For example, if you can risk 2% of your portfolio per trade, and have a $10,000 account, you’ll take a $200 position on each trade. If your account doubles or shrinks, so does your trade size.
Position sizing is critical because it helps you stay in the game, even if you run into a string of losing trades..
