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Risk Management in Crypto Market Investment

> Hello everyone, Crypto market is a very potential market but also has many risks; However, many people when entering the market with a ***thinking*** mentality should ignore it. It is because of such wrong thinking that many people lose a lot of their money when participating in the crypto market even though they have made a lot of money :> ## **Understanding how the market works ** The first thing you need to know when investing in any market is to understand it: Understand ***how it works*** and grasp the basic information*** *about this crypto market. If you do not understand this market well but still plunge into investing, you will only lose. For example the basic concepts people need to know are: * What is Bitcoin? What is Blockchain, Ethereum? What is the difference between coins?… * How does the money flow between ecosystems always move? What is the sign of cash flow? How to know this system is about to receive cash flow? How does money flow in an ecosystem? Which projects will receive cash flow? Will the project I’m about to invest in receive cash flow?… * What is the project I’m about to invest in? Is there a cash flow? Why am I dropping money? What is the difference and how does it work? Who is behind the project? Has the project called for capital from VCs? Is Tokenomics good or not, is there a development roadmap? * VCs of buy rounds at what valuation? When will they be paid the token, for how long and for how long to lock. What is their wallet address? * What are the investment funds, the creators preparing to attract people, fomo people pour money in? * What criteria of a project can I hold for a long time?… * Know how to read charts, know how to find entry and exit points by technical analysis. These are the most basic ideas that everyone needs to learn carefully and also learn a lot of things and develop themselves if they don’t want to be eliminated!! In addition, there will be information that you cannot find or the project does not share, so you must try to find all the information before making an investment decision. For projects where the information is too much flawed, no matter how fomo the market is, I will still just stand outside and observe. ## **Understand what you have and what your goals are** There is a saying “Knowing the enemy, knowing me, a hundred battles a hundred wins”, must understand one’s own position in order to do well in management. manage risk. Certainly, in our group, when participating in the market, there will be different positions, so it is not possible to present all of them separately for each person, so in my personal opinion, each person’s position is formed from different positions. the following factors: * Source of capital/personal finance: How much savings do you currently have? How much to save each month, how much can be invested? What are your personal financial goals? * Risk tolerance: How much is your own loss tolerance, whether you are ready to go all in or do you just accept the safest investments possible. * Knowledge and experience in the market: Do you understand how this market works? Have the right mindset to make money or not? If not, what knowledge or information should I learn to be able to participate in investing? Have I failed or succeeded in this market? What lessons do I need to learn? What do I need to do to get better, what do I need to maintain to continue to be successful? * Relationships acquired in the market: Do you operate independently or in a roundtable group? In fact, I recommend everyone to have as wide a relationship as possible in this market because there will be extremely beneficial inside news for you. * Thinking and investment style: Do you consider crypto a job, a serious investment channel or just a lottery? What is the investment style of a trader “adventure” with each wave or a long-term investor? For example, I don’t have as much money as my brothers and sisters doing business or real estate who just joined the market in the group, but I have knowledge, work in the crypto industry, experience and have many relationships in VCs, other companies. Community funds may have a much higher position than them ⇒ From determining our own position, we will build a suitable investment portfolio for ourselves. ## **Risk Management Strategies in Crypto Market** **1/ Portfolio Allocation** When setting up a portfolio we need to know in that crypto market is classified as how? What are the volatility characteristics of such assets? In my personal opinion, we will have many different classifications, but I will usually classify by market cap: * Coin** top1**: Bitcoin and Ethereum, these are 2 coins that are almost impossible to die. , this is a type of long-term investment, although the return is small, it is extremely SAFE. * Coin** top**: are relatively safe coins in the top 20 marketcap. * Coin **mid cap**: are the coins in the top 50, although not too safe, the profit will be higher than the coins classified above. * Coin** lowcap**: are the remaining coins with high risk but also high return In addition, not only classifying types of coins / tokens through capitalization but we can classify tokens by different categories such as platform coin, DeFi Token, Infrastructure Coin, NFT, Metaverse,… What is the ROI rate of these arrays and according to statistics, the platform coin currently has a high ROI rate. best. And then there are other small segments like Defi, we will have Lending, Borrowing, AMM, … Based on determining my position and capital, I often divide my portfolio as follows: * Ethereum accounts for about 30% of the total portfolio, because I don’t have much capital, I don’t buy Bitcoin :> * 20% of my capital will invest in smartcontract platform coin projects and floor coins because as I said, these two arrays have a high rate of investment. The highest ROI rate and with Ethereum, I hold for a long time * 50% of the remaining capital, I will allocate according to the market trend, but I do not have to be Layer 1, DeFi, NFT or Gaming myself. Usually I identify market trends and then look for suitable projects because following the cash flow is the wisest decision. However, from my point of view, no matter how risky you are, you should hold at least *** 20 – 30% portfolio*** with both Bitcoin and Ethereum Also people can read more about these 2 articles are quite good and complete: (https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/486163560330694/)(https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/486163560330694 /) (https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/503675205246196/)(https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/503675205246196/) **2/ Strategic Allocation make money** In the crypto market there will be different ways of making money based on available assets with different risks. Everyone can re-read this article: (https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/532636645683385/ )(https://www.facebook.com/groups/ryanvanhungnguoiban/permalink/532636645683385/) or (https://coin98.net/13-cach-kiem-tien-dien-tu-trong-crypto)(https://coin98.net/13-cach-kiem-tien-dien-tu-trong-crypto ) These 2 articles are quite detailed, but I will add a few more ideas that are: * The simpler the money making strategy, the safer it is with low profits and vice versa. * It is necessary to have basic knowledge of crypto to participate in areas such as lending, earn, airdrop, … * The more prestigious the protocol, the higher the safety level and vice versa. However, reputable protocols always have a way to make a lot of profits if you have a careful strategy!

Source: Collector

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