What an investor should do when market sentiment is worrisome

Stock Point
2 min readJul 10

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A bear market often forces investors to take irrational actions. When a trader looks at a severe drawdown in his portfolio, he may have different thoughts.

📷️ What not to do

1.Panic and rush During times of high volatility, it may seem that something urgent needs to be done. However, this more often than not leads to rash decisions and expenses rather than benefits or risk reduction.

2. Sell the best tokens in the portfolio. The risk of losing a promising asset is much higher than locking in a rising token profit. If a correction occurs, the token may recover faster than the rest of the market.

3. Capture a loss at the peak of the panic. When the price falls, investors often don’t take their eyes off the quotes and decide to sell based not on analysis, but on the fact of how close the size of the loss is to their psychological pain threshold.

📷 What to do:

1. Diversify the portfolio. If your portfolio falls, protect yourself and buy more conservative assets such as Bitcoin or Ethereum.

2. Hedge the portfolio. An unfavorable change in the price of the hedged asset is offset by the gain made on the other instrument. Often futures or options are used for this purpose.

3. Limit the flow of information and maintain discipline.

Information overload makes you more susceptible to stress. Follow only serious news from adequate sources. Everything that really matters, you will learn. The rest you can skip.

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