Did you hate the market crash this week? Don’t blame Elon, either China or JPMorgan. Let’s talk about managing trade risk.
The market was overheated, and newcomers needed to learn the most important lesson of investing. Nothing comes easy, and there is no free lunch. Those who survived this sharp price drop carefully managed their risk, maybe with a stop loss in place. But the best tip to get by the volatility of the market is to stay focused and stick with your original plan.
Looking at the past for similar patterns may also be helpful. History never repeats but often rhymes. Bitcoin went through the same path last year, between July and September (shown at the bottom of the chart). A long sideways market anticipated a severe price correction that led to another month of price consolidation before picking up again with higher confidence.
Patterns like these show clearly how the demand and supply of an asset redistribute around key levels. As a reminder, once Bitcoin broke above the previous high at $12,000, its price skyrocketed 250% in three months. If the same scenario unfolds, Altcoin may have a further upside for a while before Bitcoin gathers investors’ and traders’ full attention.
Remember to manage the risk carefully until more signs of strength show up. A missed profit is worth more than a realized loss!