What to do to stay safe in the world of cryptocurrencies? How to secure your profits? How to store your cryptocurrencies? Here are the principles we recommend following.

Exchanges

Diversify Capital Across Various Exchanges

Diversifying capital is a crucial element of risk management in cryptocurrency trading. It is recommended to have accounts on at least two to three different exchanges. This strategy aims to protect the investor from the risk of bankruptcy or a hacking attack on a single exchange, as has happened in the past with cases like Mt. Gox or FTX. Do not keep more than 50% of your trading capital on one platform to minimize potential losses.

Projects

Diversify Investments in Projects

Similar to exchanges, it's essential not to concentrate all your capital in one cryptocurrency project. Choose 3-4 projects that have been thoroughly analyzed and are continuously monitored. Each of them should account for no more than 25-30% of your capital to avoid significant losses in case of a hacking attack or scam, as seen with BitConnect, LUNA, or FTT. Investing in more than five projects is not recommended due to the difficulty of keeping up with all relevant updates and news.

Capital

HODL Strategy

It is recommended to allocate at least 30% of your capital to "HODL," which means holding assets for the long term. Such funds are not intended for sale, even in the event of a potential bull market peak. It's also important to have a cash reserve for at least a three-month period, which can help you survive incomeless periods and avoid hasty investment decisions during high market volatility.

Profits

Realize and Secure Profits

Regularly withdrawing a portion of your profits to personal wallets protects against the loss of funds in case of exchange issues. This action also fosters a healthy habit of managing your cryptocurrencies and resilience to the risk of asset centralization.

Seed Phrases

Secure Private Keys

Seed phrases for cryptocurrency wallets should be memorized and regularly rehearsed to prevent forgetting them. Using mnemonic techniques can help in this regard. Storing seeds in multiple secure locations in an encrypted form prevents their loss or theft.

Withdrawals

Two-Factor Withdrawal Authorization

Securing the withdrawal process with two forms of authorization, such as Google Authenticator and SMS, is fundamental to protecting funds on the exchange. It's also important to have copies of emergency codes for Authenticator, encrypted and stored in a secure place.

Leverage

Limiting Leverage Usage

Using financial leverage significantly increases the risk, especially when it comes to potential liquidation of positions. Investing instead of speculating with leverage should be a priority, focusing on gradually building profits rather than taking excessive risks to get rich quickly.

Buying

Thoughtful Order Placement

Instead of impulsively buying at the current market price, it's worthwhile to focus on placing limit orders that allow for purchasing assets at a price lower than the market price. This helps reduce emotional influence on trading decisions and enhances the role of strategic planning in the investment process.

Stablecoins

Diversify Stablecoins

Using multiple different stablecoins can protect against the risk associated with potential fraud or technical issues with one of them. This is part of the risk management strategy in your crypto portfolio.

Knowledge

Market and Blockchain Analysis

Stay updated with blockchain data and follow current cryptocurrency news to be aware of the market situation. Proper interpretation of market data allows for a better understanding of trends and potential market changes.

Emotions

Maintaining Emotional Balance

Approaching investments with a positive mindset and without expectations can impact decision-making positively. Regular breaks from market activity can help maintain a healthy perspective and contribute to better investment management. According to the law of attraction, maintaining a positive attitude can attract positive results.

Updated on: 12/11/2023