Understand Bear Market Trade Risk: What do you know before diving
For most merchants, the cryptocurrency market was volatile and unpredictable because prices quickly varied in response to news and mood. Although some investors have earned a lot of profit in the market market, many others have lost money or stopped. As the market is usually declining, understanding the risk of trade in the bear market is essential for anyone who wants to participate.
What is the bear market?
The bear market is a period when the total result of the securities market is rapidly and significantly reduced. In the meantime, investors are increasingly attentive to their future investment views so that they can sell their shares at low prices, hoping to sell later at a higher price. The bear market can take months or even a year, and has several examples, including 2008. The financial crisis, during which the stock market fell from about 4,000 to 1000.
The risk associated with the bear market trade
The trade in the bear market causes a number of unique risks that are not available in the bull market. Some basic risks are:
* Losses : The most obvious risks are high losses because prices can drop rapidly and investors can sell their shares at a lower price than those who have bought.
* Liquidity : Liquidity is very important when trading in the bear market, as prices can vary quickly and investors must be able to sell or buy quickly. However, if the market is too sick, it may be difficult to leave a quick posture that causes more losses.
* Damage to time
: The breakdown of time means losing value over time due to interest rates or other factors. In the bear market, this means that even low profits can be lost over time if investors do not sell their shares fast enough.
* Volatility : Volatility is another risk associated with the bear market trade, as prices can vary quickly and investors must be able to adapt quickly.
softens the risk of trade in trade markets
Although there are no guarantees in the bear market, merchants can take some measures to alleviate the risk:
- Do research : Before trading, make sure you understand basic technology and market trends.
- Set clear goals
: Before you start trading, clearly define your goals and risk tolerance.
3.
- Add your portfolio : Many of your portfolios can help reduce the effects of a particular market or sector.
- Be aware of : Be aware of market development and news to make more conscious trading decisions.
conclusion
Trading in the bear market is a great risk, the high value of the goal to consider carefully and plan. Understanding the risks of the bear market trade and reducing them to implement measures Merchants can reduce loss and potential interests from these unstable markets.