Having an investment portfolio can be challenging, as the markets tend to become aggressive and competitive. Keeping your cool during such a situation can be pretty challenging, especially if you’re just taking your first steps in this environment. If you’re thinking of investing in cryptocurrencies, there’s additional pressure that comes with dealing with a constantly changing marketplace. You have to adjust your strategy to meet all the shifts and demands, which is no easy task.
According to the latest Binance data, the most critical cryptocurrencies experienced considerable growth during the past twelve months, regaining much of what they lost during the bear market and subsequent crypto winter of 2022. However, it’s still important for investors to remain aware of the possibility of losses that can exceed the gains sometimes. Here are some tips that will allow you to stay calm even during times when it might seem impossible to do so.
Set goals
Having very clear goals allows you to keep your mind clear as well. You’ll have a set purpose in mind, so you can work towards it despite the impediments that can intervene along the way. It also means that there will be fewer distractions that cause you to deviate from your original plan. This is very important because since the marketplaces change so often, the FOMO can sometimes overtake the need for stability and careful decision-making.
Many investors fear missing out on the biggest opportunity of their lives that will pass them by, never to return again. However, the truth is that most of the time, making incredibly rash decisions does more harm than good. A certain degree of risk is essential for gains, and there’s no way to trade without experiencing some high stakes at times, but you need to choose your battles and avoid jumping from one high-risk trade to the next.
If you find yourself caught in a loop, take a step back and reassess your priorities to remember what’s important for you. Think back to why you started trading in the first place, and remind yourself of that anytime you’re on the brink of making an important decision.
Go long-term
There’s no denying the thrill that comes with short positions and day trading. You start and end transactions within a fixed time, in an all-or-nothing type of situation that can become addictive. But just as the gains can be tremendous, the losses are also substantial enough to leave you reeling. Sometimes, you might never recover from them, as you could potentially lose all your assets.
While that is indeed the worst-case scenario, and most won’t ever deal with that, it’s still better to choose long-term trading. In 2023, most crypto investors switched to hodling instead of short-term transactions. That’s mainly because most of those who focused on the latter recorded significant capital loss throughout the year.
Becoming a long-term investor is no simple thing. You have to educate yourself to be disciplined and patient. The siren call will be strong, and you’ll feel tempted to buy or sell. Don’t fall into the trap of becoming erratic, or you’ll work yourself into complicated trades you cannot escape.
Set limits
Setting limits within the trading world isn’t just crucial for your financial well-being but supports your emotional welfare as well. Don’t invest more than you can afford to lose. Getting huge sums into your ventures only to see them fail can leave you depressed or even dealing with considerable financial struggles. That won’t do you and your mental health any good.
Making sure to set healthy limits allows you to feel more in control as well. This is especially important if you’re just getting started in this environment, and concerned that you’ll make mistakes you won’t be able to recover from. On that same note, you should avoid checking your portfolio or the prices too often. It’s essential to remain aware of the shifts in the marketplaces you invest in, but becoming obsessed will unquestionably do you more harm than good.
It can put unnecessary pressure on both your short and long-term goals and cause you to have reactions that are too extreme. For instance, you might see a minor downturn as a more significant opportunity than it is, so you end up purchasing too much at a price that is still relatively high. If the times are uncertain, take time to adjust and set your plans in order. Keep yourself in check, and don’t allow your behavior to become illogical.
Diversification
This is a vital thing all investors should remember, no matter how long they’ve been in the trading ecosystem. Focusing entirely or too much on a single asset is risky business. If the asset would fall or lose value in the future, you would also lose your money. You mustn’t have all your eggs in one basket so you can manage the risks much better.
A diversified portfolio includes a wide array of bonds, stocks, precious metals, real estate, crypto and many more. Working with all these asset classes also means learning more about the interactions between the different marketplaces. The trading world is connected, and understanding how it operates can only work to your advantage.
Since the different assets will behave in various ways at different points in time, you’ll always get returns, so there’s no need to worry about your income dwindling at any point. That will put your mind at ease and allow you to feel more relaxed and confident about your performance and general outlook.
The bottom line
If it’s challenging to manage on your own, don’t be afraid to ask for help. Professional advisors can offer advice on how to deal with market volatility. You can even create a financial plan together so you get their expertise and assistance on how to start. Make sure to connect with the larger investor community. Many have been in the game for years and can offer helpful advice.
As for the possible stress that can arise, you can always reach out to a therapist and discuss your problems at length. Anytime you start feeling overwhelmed, remember you can always choose to step away and give yourself some time to relax. Your portfolio will still be there when you decide to return.