To avoid risks in the digital currency market, you can start from the following aspects:
Planning before investment
• Fully learn knowledge: Have an in-depth understanding of the basic principles, technical architecture, market operation mechanism and other knowledge of digital currency, master concepts such as blockchain technology and consensus mechanism, as well as the characteristics and application scenarios of different digital currencies.
• Clear investment goals and risk tolerance: According to your own financial situation and investment plan, determine whether it is short-term speculation or long-term investment, and reasonably assess the degree of loss you can bear. For investors with low risk tolerance, the proportion of digital currency investment in assets should be low.
Investment strategy
• Reasonable asset allocation: Do not concentrate funds on one digital currency. You can diversify your investment in digital currencies of different types and different market values such as Bitcoin and Ethereum. You can also combine traditional assets such as stocks and bonds to reduce the impact of single asset fluctuations.
• Control positions: Avoid excessive leverage and full position operations. It is generally recommended that the leverage ratio should not exceed 5 times, and the position should be controlled at 15%-30% of the assets to leave enough funds to cope with market changes.
• Set stop loss and take profit: According to market conditions and investment goals, set reasonable stop loss and take profit positions, such as 10% - 15% stop loss and 20% - 30% stop profit. When the points are reached, they must be implemented resolutely to prevent greed and fear from affecting decision-making.
Post-investment management
• Pay attention to market dynamics: Pay real-time attention to the global political and economic situation, such as the impact of monetary policies and trade frictions of various countries on the digital currency market, and also pay attention to changes in industry policies and regulations, technological innovation, project team dynamics, etc.
• Ensure asset security: Choose a safe and reliable trading platform, check the platform's reputation, security measures, etc., and use cold wallets to store a large amount of digital currency, back up and keep private keys, and do not easily disclose them to others.