I am new to cryptos, having just started about 6 weeks ago. Watching this rocket launch of a crypto market has reminded me of past losses and what I wish I had done in those circumstances. Having suffered the pain of real estate losses in the 1990s and stock losses in the Great Financial Crisis of 2008-9, I am reminded of some helpful guidance. Warren Buffett is known for saying there are two rules in investing:
- Don't lose money.
- Don't forget rule #1.
Additionally, psychologists tell us that loss aversion, the pain felt due to a loss, actually exceeds the pleasure of a gain for many people.
For very volatile investments, a good piece of advice is to sell half when it is up 100% and let the rest ride. That action recovers your original capital. It also ensures that there is no scenario resulting in a loss, and leaves a good amount in the market for further gains. I intend to implement that for my crypto positions this week. I will sleep better while waiting and hoping for further gains with the remaining cryptos.
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