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Investment mistakes should be avoided during the Bear Market

The financial market likes to present surprises. Unfortunately, these surprises are not always pleasant and the cryptocurrencies owners know about it like no one else. In this article, we will tell you about the main mistakes that should be avoided during the bear market and how to properly manage your finances.

Investopedia describes a bear market as a market experiencing a prolonged price decline of 20% or more after the last high. During a bearish trend, analysts and investors more often than usual try to determine whether we have reached the end of the tunnel or are in the epicenter of a financial storm. For those who have been investing for a long time, the bear market is not particularly dangerous, but for “young” investors it can cause rash actions.

Mistake 1: Trying to get at least some profit from sale of assets

Selling off all your assets after you see the red color in your portfolio is the last thing you should do. Yes, volatility is scary, but if you want to make a profit, you should reconsider your strategy and follow a few simple rules:

1) Don’t sell at a loss. It is worth getting rid of assets only when it is obvious that the bear market is not the main reason for the fall in value.

2) Abandon the actions performed by those who massively sell their assets at the first signs of a drop in the asset price. Competent investors know that market trends change in waves. And those who sell everything are often the losers.

3) Bear market is a good way to acquire assets at lower prices. Instead of panicking, rethink your investment strategy according to your own goals, at least until the end of the bear market.

Mistake 2: Trying to invest all your funds in a falling asset hoping to get maximum profit

It may seem that the second error completely contradicts the first, but it is not. During a bear market, funds available for investment are what can keep you afloat. As we all know, the biggest risk of investing is the loss of all the money, including the initial investment and much more.

Professional investors know that a bearish trend is a great time to accumulate savings, allowing them to avoid dependence on investments. In addition, it is much more difficult to recover at the end of the market cycle, and to restore the value of your investment portfolio if you sold assets at a loss.

Mistake 3: Being too aggressive and getting carried away with risky Investments

Investing in the riskiest asset during a recession is a sure path to disaster. No matter how experienced an investor you are, it is extremely important to protect your funds. It is especially risky to “run” for profitability when you are not too adept at managing a high-risk portfolio.

Mistake 4: Invest in assets of projects in which you do not understand anything

Regardless of whether the market is bullish or bearish, investing in projects that you are not familiar with involves a lot of risk.

Even if you see an opportunity to make a deal with a high profit, you should not part with money without understanding the basics and evaluating the quality of the project you are investing in. Professional investors know that checking a company or a project is at least half of the success of a future investment. If you do not have the opportunity to conduct a professional audit of the project or company, you can spend time studying reviews and information on the Internet.

Common investment mistakes to avoid

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