Quote from: jkinit2125 on February 03, 2018, 12:40:42 AM

Risks are inherent or always there whenever we talked about investment especially Bitcoin and the whole cryptocurrency community. But how do you deal with these risks? What are your experiences or even techniques in managing risks? In minimizing risks or even eliminating it?

Eliminating risk? Stay in fiat and accept inflation eating away on your savings. Minimizing risk? Know yourself and don't do anything stupid.

This means:

1) Understand what you're buying.

2) Don't invest into something only because it has risen.

3) Don't exit a market only because it has declined.

4) Understand what you're buying.

5) Invest only as much as you can afford to lose.

6) Prepare enter and exit strategies way in advance.

Number 1) helps preventing you from doing stupid things. If you don't understand what you're buying, you're just gambling. If you understand what you're buying, but know it's shit... you shouldn't be buying it in the first place. If you understand what you're buying and are convinced of its merits... number 2) and 3) will be less likely to affect you. Number 5) helps alleviate your psychological burden which makes it easier to not do stupid things. Such as 2) or 3) for example. Same goes for 6).

Note that hedging only helps if your hedge actually acts as one when shit hits the fan. Historical analysis may help the process, but could still fall short.

Note that diversification only works if what you are buying is worth investing in. A diversified bucket of shit, is still a bucket of shit.