How Not To Get Rekt Trading Cryptocurrency
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One thing is for certain in cryptocurrency trading; you don’t want to get rekt!
In short, getting rekt is where you lose everything in one swift and brutal market movement. For many novice traders, it’s game over.
There’s no returning from such a horrific event and many end up quitting cryptocurrency trading altogether.
In this article, we’re going to look at just what getting ‘rekt’ means in the cryptocurrency world and how you can avoid that happening to you.
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What does ‘rekt’ mean?
Rekt is cryptocurrency slang for ‘wrecked’. It originates from gaming but has since become popular in cryptocurrency.
The term is believed to have originated from British English. It basically means you have lost everything.
Getting rekt can happen when a trader loses out in a big way from a trade.
In most cases, the results are instantaneous; one big and fatal move where a trader’s funds are wiped out, concluding in a severe loss that they may never recover from.
You may also see the term rekt used to describe the market as well when a cryptocurrency dives dramatically in price.
Another term you may also hear is ‘bagholder’. This refers to someone left holding a cryptocurrency that has almost no value.
After getting rekt, you could also be called a ‘bagholder’ if you lost everything by investing a large amount of money in an ICO that later failed.
How to not get rekt
The best way to prevent getting rekt is to avoid big trades, plain and simple!
You don’t need to always take such a huge position when trading, in fact, you rarely ever should. Most successful traders will make their fortune after a long series of trades after years.
It is super rare for a trader to amass their fortune on one trade. That said, it is not too rare for an inexperienced trader to lose everything on one bad trade!
The reason behind this is simple; most crypto traders do not actually know too much about cryptocurrency, which is why they end up getting rekt.
Many of them bought into the hype because they saw how much money there is to be made, unaware they should have experience in trading.
The fact is to really know how to make a lot of money trading cryptocurrency, you actually need to know how a lot about how to trade, a skill many novice crypto traders neglect.
And because of this, they can end up losing everything.
Further to this, inexperienced cryptocurrency traders are more likely to fall victim to their emotions. In most cases, their anger and excitement, which can lead them to trade more than they should.
Risk management should always come first!
Before you start thinking about making all that money you could make, you need to be thinking about how you can protect what you already have.
You should think a lot about your trades and how much you are willing to risk.
The truth is that the best traders trade less, not more! They are very cautious and only trade cryptocurrencies they are 100% sure about in situations they are 100% sure about.
Many of them do this by following the 1% risk rule. Only ever risk 1% of your trading account on any trade.
This way you will not lose everything in one go in one trade and you’ll have more opportunities to make your fortune.
Another crucial thing you should be doing is diversifying your trading portfolio.
It is advised to do this because if one cryptocurrency goes down in price, you can trade another. And if the whole cryptocurrency market is down, you can trade a different asset.
This way you can continue to stay profitable and reduce your losses.
If you catch yourself about to make a trade only thinking about the profit you could make, stop and assess the risk and then think if it’s a good idea or not.
Learn to investigate cryptocurrencies properly
Knowledge is the key to not getting rekt as a cryptocurrency trader.
To truly be a real cryptocurrency trader, you should have a lot of knowledge about how cryptocurrency works. After all, how can you trade something you don’t really understand?
And you should have particularly immense knowledge on all the cryptocurrencies you trade. There should be nothing that could happen that you didn’t foresee.
Further to the above, you should be keeping up with how cryptocurrencies are changing. Remember, the industry is still very young, and cryptocurrencies are still developing a lot.
No cryptocurrency can be said to be fully complete. Even cryptocurrencies that plan minimal development still have issues they are trying to overcome and are therefore changing.
Another key piece of advice is not to trade cryptocurrencies just because someone encourages you to.
Never follow the advice of others; follow your own research and what you can see to be true. Facts always come before rumours or dreams.
Go with the flow of the market
As you probably know, the cryptocurrency market is highly volatile. It is super easy to get rekt in one single downwards movement.
A lot of novice cryptocurrency traders don’t realise that the market works in cycles. The market will never just keep going up or stay hovering at the bottom forever.
It reaches high points, declines, reaches low points and then increases. This happens to every market, even cryptocurrency.
Remember that things will not always be as they are, and you should prepare for it. Things may be good now, but that will not last forever, and you should stay flexible.
You should also keep away from overvalued cryptocurrencies. That is cryptocurrencies that are already a high price and keep climbing.
They will eventually fall in price and you would have got rekt because you bought in at a high price and it only went down.
Look for cryptocurrencies that are reasonably priced and appear to be trending upwards.
This means conducting a lot of research about the cryptocurrency, not only how it works but how it has performed historically and what is likely to affect its price.
Understanding the historical movements of a cryptocurrency can help you develop more realistic goals when trading.
Unfortunately, this can sometimes be a little difficult because many cryptocurrencies have only been around a few years, which means there is a limited amount of data to look at.
Key things to look at are not only the highest and lowest price it has ever reached but also things like trading volume, which indicates how much people are trading an asset.
Develop a sixth sense for scamcoins and low-quality altcoins
Learn to spot pump and dump scams which are a very common way to get rekt in cryptocurrency trading. The majority of which are ICOs.
Pump and dump scams are where the creator of a cryptocurrency encourages people to invest in their cryptocurrency to artificially pump up the price and then sell everything.
Typically, in such situations, the creators own a large portion of the cryptocurrency and once this is sold, the cryptocurrency’s value instantly plummets.
Victims of such scams are certainly rekt and could also be called ‘bagholders’, as we mentioned above.
Two key examples of cryptocurrency scams to look at are BitConnect and OneCoin. However, it should also be mentioned that exchanges and other businesses offering cryptocurrency-related services can also be scams.
A good piece of advice is to stay away from unknown coins, in many cases, they are simply not worth trading, even if they are not scams. As a trader, you should keep to the top 10.
And, if you cannot work out what makes a cryptocurrency different from the rest of the market, it is probably not worth trading.
Tezos is a great example of a good ICO to get involved in. So good, in fact, they raised $232 million.
They clearly explained what they wanted to do, and their goals are clearly achievable. Further to that, there was a lot of information available about the creators which gave traders trust.
It may be wise to keep away from ICOs until you have a lot of skill on cryptocurrency.
When you finally do start trading ICOs, don’t trust projections on price. The valuation you place on a cryptocurrency should be based on what they are doing and how they are attempting to achieve it.
If you remember anything from this article, make it these key points.
- Rekt is cryptocurrency slang for losing a lot (or all) of your money on a bad cryptocurrency trade. Typically, very suddenly.
- Many traders get rekt because they don’t understand how cryptocurrency works. Or trading for that matter!
- Improve your knowledge of cryptocurrency and trading if you want to survive. It’s the best way to avoid getting rekt.
- Learn to spot scams and low-quality cryptocurrencies. The best way to do this is to stick to well-known cryptocurrencies and carefully pick ICOs.
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