Buying crypto low is the name of the game! It’s a fundamental principle of investing, not just in crypto. When prices are down, you get more bang for your buck. Think of it like buying a stock on sale – you’re essentially getting a discount.
Dollar-cost averaging (DCA) is a great strategy to mitigate risk. This involves investing a fixed amount of money at regular intervals, regardless of the price. This way, you buy more when it’s low and less when it’s high, averaging out your cost basis.
But timing the market is tricky. No one can perfectly predict the bottom. What you can do is research the projects you’re interested in. Focus on fundamentals:
- Technology: Is the underlying technology innovative and useful?
- Team: Is the team experienced and reputable?
- Use case: Does the crypto have a real-world application?
- Community: Is there a strong and active community?
Consider these factors, and then DCA into projects you believe in. Don’t panic sell when prices dip; that’s often where the real gains are made.
Remember, past performance is not indicative of future results. Always do your own research (DYOR) before investing in any cryptocurrency. Never invest more than you can afford to lose.
Using a combination of fundamental analysis and a DCA strategy increases your chance of long-term success. Also keep in mind that market cycles exist. Bear markets are inevitable, but they often precede bull markets. This is another reason to buy the dip.
- Research thoroughly.
- Utilize DCA.
- Hold long-term.
- Manage risk appropriately.
How to trade crypto for beginners?
Entering the crypto market? Here’s a streamlined approach for beginners:
- Grasp the Fundamentals: Cryptocurrency trading involves buying and selling digital assets like Bitcoin or Ethereum, aiming to profit from price fluctuations. Understand blockchain technology, decentralized systems, and the inherent volatility. Don’t just chase hype; learn the underlying mechanics.
- Define Your “Why”: Are you seeking short-term gains through day trading, or long-term growth by holding (HODLing)? Your investment strategy (active vs. passive) dictates your approach. Consider your risk tolerance – are you comfortable with potential losses?
- Choose Your Crypto: Research various cryptocurrencies. Consider factors like market capitalization, project roadmap, team behind the project, and overall utility. Diversification across different asset classes can mitigate risk. Avoid investing in projects solely based on social media hype or promises of quick riches.
- Select a Reputable Exchange: Open an account with a regulated and secure cryptocurrency exchange. Compare fees, security measures, available cryptocurrencies, and user interface. Prioritize exchanges with robust security features like two-factor authentication (2FA).
- Identify Trading Opportunities: Analyze market trends using technical analysis (chart patterns, indicators) or fundamental analysis (project fundamentals, news events). Learn to interpret market sentiment and news impact. Begin with smaller trades to gain experience and refine your strategy.
- Long or Short?: “Going long” means buying with the expectation of price increase; “going short” (often through derivatives like CFDs) involves profiting from price drops. Understand both strategies thoroughly before employing them. Shorting is inherently riskier.
- Risk Management is Paramount: Never invest more than you can afford to lose. Use stop-loss orders to limit potential losses. Diversify your portfolio across different cryptocurrencies to reduce exposure to single-asset volatility. Regularly review and adjust your risk management strategy as needed.
- Monitor and Adapt: Constantly monitor your trades. The crypto market is dynamic; be prepared to adjust your strategies based on market conditions. Celebrate successes, learn from failures, and continuously refine your trading approach.
Important Note: Cryptocurrency trading involves significant risk. Consult a financial advisor before investing.
How do you know when it’s a good time to buy crypto?
Timing the crypto market is notoriously difficult, but understanding market dynamics can improve your chances. While there’s no magic bullet, some strategies offer potential advantages. Many believe buying early in the morning, before the NYSE opens, can be beneficial. This is because the US market’s influence often affects crypto prices, leading to potential upward movement as trading begins. However, this isn’t a guaranteed win; it’s merely a common observation.
Focus on relative value, not just time. Pay close attention to individual cryptocurrency performance. Trends vary drastically between coins; Bitcoin might be consolidating while Ethereum experiences a surge. Technical analysis, examining charts for support and resistance levels, can be invaluable in identifying potential entry points, regardless of the time of day. Fundamental analysis, assessing a project’s technology, team, and adoption, offers long-term perspective and helps mitigate risks associated with short-term speculation.
Consider macroeconomic factors. Global economic events and regulatory announcements significantly impact crypto markets. Negative news can cause widespread sell-offs, presenting buying opportunities for those with a long-term outlook. Conversely, positive news can drive prices up, making it harder to find attractive entries.
Dollar-cost averaging (DCA) is a powerful strategy. Instead of trying to time the market perfectly, DCA involves investing a fixed amount of money at regular intervals, regardless of price fluctuations. This strategy reduces the risk of buying high and mitigates emotional decision-making.
Remember: No strategy guarantees profits. Thorough research, risk management, and a long-term perspective are crucial for success in the crypto market. The information provided here is for educational purposes only and is not financial advice.
Can I make $100 a day from crypto?
Making $100 a day in crypto is achievable, but it demands discipline and a deep understanding of market mechanics. Forget get-rich-quick schemes; consistent profitability hinges on technical analysis, understanding order books, and risk management. Identify reliable indicators – RSI, MACD, moving averages – and learn to interpret them within the context of broader market sentiment. Diversification across various cryptocurrencies is crucial to mitigate risk. Consider employing strategies like dollar-cost averaging (DCA) for long-term gains or day trading with a meticulously planned entry and exit strategy. Backtesting your strategies on historical data is vital before risking real capital. Mastering leverage is a double-edged sword; leverage amplifies gains but also magnifies losses – use it cautiously. Remember, transaction fees eat into profits, so factor them into your calculations. Finally, continuous learning and adaptation are paramount in this dynamic market. Stay updated on regulatory changes and technological advancements.
Don’t chase quick profits; focus on building a robust strategy based on solid fundamentals and risk management. This will be far more sustainable than chasing short-term gains, which often lead to substantial losses.
Remember, no strategy guarantees daily profits. Periods of drawdown are inevitable. The key is to manage those drawdowns effectively and maintain a disciplined approach to your trading.
What time of the day is best to buy crypto?
The optimal time to buy crypto is a frequently debated topic, and while there’s no magic hour, pre-market trading, before the NYSE opens, often presents a strategic advantage. This is because Asian and European markets influence pricing before US traders significantly impact the market, creating potential for price increases as the day progresses. However, this isn’t a guaranteed phenomenon. Observe the price action of your chosen cryptocurrency for several days to identify its individual tendencies. Some coins exhibit greater volatility during specific hours, influenced by factors like news announcements or community activity within particular time zones. Consider using technical analysis tools, like candlestick charts and moving averages, to identify optimal entry points within your preferred time window. Remember that market timing, while beneficial, is only one piece of a successful crypto investment strategy. Diversification and risk management remain paramount.
Furthermore, macroeconomic factors, such as major economic announcements or geopolitical events, can heavily influence crypto prices regardless of time of day. Staying informed on global events and understanding how they might impact the market is crucial. Always conduct thorough due diligence on any cryptocurrency before investing, focusing on its fundamentals and underlying technology in addition to market trends.
Finally, consider the potential impact of automated trading bots. These algorithms often execute trades at specific times based on predetermined parameters. Being aware of their activity can provide insight into predictable price movements at certain hours, but this requires advanced market knowledge and experience. Remember, consistently monitoring market conditions and adapting your strategies is essential for navigating the complexities of the crypto market.
Which crypto to buy now?
Choosing a cryptocurrency is tricky! Here are some popular options, but remember, I’m not a financial advisor, and this isn’t financial advice. Always research thoroughly before investing.
Bitcoin (BTC): The original and most valuable cryptocurrency. Think of it like digital gold – a store of value. Its market cap is huge, meaning it’s very established, but also potentially less volatile for large growth compared to newer cryptos.
Ethereum (ETH): The second-largest cryptocurrency. It’s more than just a currency; it’s a platform for building decentralized applications (dApps) and smart contracts. This makes it potentially more versatile but also riskier.
Tether (USDT) & U.S. Dollar Coin (USDC): These are “stablecoins,” designed to maintain a 1:1 peg with the US dollar. They’re less volatile than Bitcoin or Ethereum, often used for trading and reducing risk. However, there are concerns about their stability that you should research carefully.
XRP (XRP): Associated with Ripple, a company focused on cross-border payments. Its price has been volatile, and it’s facing legal challenges which could significantly impact its future.
Binance Coin (BNB): The native token of the Binance exchange, one of the world’s largest cryptocurrency exchanges. Its value is tied to the success of Binance, so it’s important to consider the exchange’s overall health.
Solana (SOL): A relatively newer cryptocurrency known for its fast transaction speeds. It’s considered a competitor to Ethereum, but it’s also a much younger project, so it carries higher risk.
Dogecoin (DOGE): Started as a meme coin, its price is highly influenced by social media trends and speculation. It’s considered extremely volatile and risky.
Important Note: The cryptocurrency market is highly volatile. Prices can fluctuate dramatically in short periods. Never invest more than you can afford to lose. Consider diversification (spreading your investments across multiple cryptocurrencies) to manage risk. Do your own in-depth research before investing in ANY cryptocurrency.
Can you make $1000 a month with crypto?
Making $1000 a month with crypto is definitely achievable, but it’s not a guaranteed win. It heavily relies on your knowledge, risk tolerance, and initial capital. Think of it less like a job with a fixed salary and more like a volatile, potentially high-reward game.
Factors influencing your monthly gains:
- Investment size: Larger investments naturally offer a greater potential for returns, but also carry proportionally higher risk.
- Trading strategy: Day trading, swing trading, or long-term holding each present different risk/reward profiles. Day trading requires intense focus and expertise, while long-term holding is more passive but requires patience.
- Market knowledge: Understanding market trends, technical analysis, and fundamental analysis is crucial. Ignoring this significantly increases your chances of losses.
- Diversification: Don’t put all your eggs in one basket! Spreading investments across various cryptocurrencies reduces risk.
- Risk management: Setting stop-loss orders is essential to limit potential losses. Never invest more than you can afford to lose.
Strategies to explore (research thoroughly before implementing):
- Staking: Lock up your crypto to help secure a blockchain and earn rewards.
- Lending: Lend your crypto to others and earn interest.
- Yield farming: A more advanced strategy involving providing liquidity to decentralized exchanges (DEXs) in exchange for high yields. High risk, high reward.
- Arbitrage: Exploiting price differences between exchanges. Requires speed and efficiency.
Important Note: Cryptocurrency markets are notoriously volatile. Significant losses are possible. Thorough research and risk management are paramount.
How to know when to buy and sell crypto?
Timing the crypto market perfectly is impossible, but strategic entry and exit points significantly improve your odds. Avoid chasing pumps; instead, focus on identifying undervalued assets with strong fundamentals. This requires thorough due diligence, understanding the project’s roadmap, and assessing its team’s competence.
Key factors to consider:
- Market Sentiment: Analyze on-chain metrics (e.g., active addresses, exchange inflows/outflows) alongside broader market trends. Extreme fear or greed often indicates unsustainable price movements.
- Technical Analysis: Utilize chart patterns (e.g., head and shoulders, double tops/bottoms), indicators (e.g., RSI, MACD), and support/resistance levels to identify potential entry and exit points. Backtesting strategies on historical data is crucial.
- Fundamental Analysis: Evaluate the underlying technology, tokenomics, team, and adoption rate of the project. A strong project can weather market downturns better than a weak one.
- Trading Volume: Buying during periods of low trading volume can reduce volatility, offering a more stable entry point. Conversely, high volume often accompanies significant price movements, presenting both opportunity and risk.
Advanced Strategies:
- Dollar-Cost Averaging (DCA): Invest a fixed amount at regular intervals, mitigating the risk of buying at a market peak.
- Grid Trading: Set buy and sell orders at predetermined price levels to automatically capitalize on price fluctuations within a defined range.
- Arbitrage: Exploit price discrepancies across different exchanges.
Remember: Always manage risk effectively through diversification and position sizing. Never invest more than you can afford to lose. Crypto markets are highly volatile; losses are inevitable. Learn from mistakes and adapt your strategy accordingly.
At what point should you sell your crypto?
Selling crypto is a nuanced dance, not a knee-jerk reaction. Profit targets are crucial. Don’t just chase arbitrary percentages; base your target on your risk tolerance and initial investment. A 100% gain might be perfect for a small, speculative investment, but insufficient for a significant portion of your portfolio. Consider dollar-cost averaging your profits – selling a portion at various price points reduces risk and maximizes returns. Remember, a bull market can last years, but a bear market can wipe out everything in months.
Unexpected expenses are a legitimate reason to sell, but aim to minimize selling during market downturns. If forced to liquidate, prioritize selling assets with the least potential for future appreciation. Diversification is key here; a heavily concentrated portfolio in a single asset makes emergency liquidations far more painful.
Beyond these, consider tax implications. Holding assets for long-term capital gains can significantly reduce your tax burden. Consult a financial advisor specializing in cryptocurrency to optimize your tax strategy. Furthermore, understand the psychological aspect; fear and greed are powerful drivers. Develop a disciplined plan and stick to it – ignore the daily noise and focus on your long-term strategy.
How do you know if a crypto coin will rise?
Nobody can predict with certainty which cryptos will moon. It’s all speculation, but understanding supply and demand helps. Think of it like this: Scarcity drives value. A coin with a limited supply (like Bitcoin’s 21 million cap) is inherently more valuable than one with an unlimited supply. Then there’s demand – driven by adoption, utility, hype, and even meme culture. A project with real-world use cases, a strong community, or exciting development updates often sees increased demand, pushing the price up.
Fundamental analysis digs into the project’s technology, team, roadmap, and market position. Is it solving a real problem? Does it have a competitive advantage? A solid project with strong fundamentals has better chances of long-term growth. Conversely, technical analysis uses charts and indicators (like moving averages, RSI, MACD) to identify potential price patterns and trading opportunities. It’s more short-term focused and can be helpful for timing entries and exits.
However, always remember the risks. The crypto market is incredibly volatile. Hype can inflate prices, leading to massive corrections. DYOR (Do Your Own Research) is crucial. Don’t blindly follow tips or influencers. Diversification across multiple projects with different risk profiles helps mitigate losses. Consider the long-term potential of a project, not just short-term price movements.
How to tell when a crypto is about to go up?
Predicting which crypto will rise is impossible. Nobody can tell you for certain.
However, understanding supply and demand helps. Think of it like this: if many people want a cryptocurrency (high demand) and there’s only a limited supply, the price usually goes up. Conversely, if many people are selling (high supply) and few are buying (low demand), the price tends to drop.
Factors influencing supply and demand:
- Adoption: More people using a cryptocurrency increases demand.
- Regulation: Government rules can impact both supply and demand.
- Technology: Upgrades or new features can boost demand.
- Market sentiment: Overall feeling about the crypto market (optimistic or pessimistic) strongly affects prices. News, events, and social media influence this.
- Competition: The number of similar cryptocurrencies affects its individual value.
It’s crucial to remember: Crypto markets are volatile. Prices can swing wildly in short periods. Don’t invest more than you can afford to lose.
Instead of trying to time the market (predicting when to buy or sell), focus on these:
- Diversification: Don’t put all your eggs in one basket. Invest in several different cryptocurrencies.
- Research: Understand the technology and the team behind each cryptocurrency before investing.
- Long-term perspective: Crypto is a long-term investment. Don’t panic sell during market dips.
How do you know when to sell crypto?
Knowing when to sell crypto is crucial for maximizing profits and mitigating losses. Several key indicators can guide your decision. One obvious trigger is significant price appreciation. If your holdings have doubled or tripled in value, consider taking profits – at least on a portion. This allows you to secure gains and reduces your risk exposure. This strategy is often referred to as “taking profits” or “partial liquidation”.
However, price appreciation isn’t the only factor. A fundamental shift in your belief in a project’s long-term potential should also prompt a reevaluation. If the underlying technology falters, the team experiences significant setbacks, or the competitive landscape changes drastically, selling might be prudent. Thorough due diligence is essential before making any investment, and continued monitoring is just as vital.
Furthermore, the emergence of better investment opportunities can justify selling some or all of your crypto assets. If you discover a more promising project with stronger fundamentals and higher potential returns, reallocating your capital could prove beneficial. Always weigh the risks and potential rewards before making any significant portfolio shifts. Diversification is key – spreading your investments reduces the overall risk.
Finally, portfolio rebalancing is a crucial aspect of responsible crypto investing. If a single crypto asset takes up a disproportionately large share of your portfolio, consider selling some to maintain a balanced, diversified approach. This reduces your vulnerability to market fluctuations affecting a particular asset. Rebalancing involves periodically adjusting your asset allocation to maintain your desired risk profile and asset allocation.
Remember, these are just guidelines. The optimal selling strategy depends on your individual risk tolerance, investment goals, and the specific circumstances surrounding your holdings. Tax implications also play a crucial role and should be carefully considered before any sale.
When should I cash out my cryptocurrency?
Timing your cryptocurrency sell-off is crucial, and tax implications play a significant role. For most, capital gains taxes are lower on long-term investments (held for over a year), potentially making it advantageous to hold your crypto for at least 12 months before selling. This longer holding period allows you to take advantage of the lower long-term capital gains tax rates.
Conversely, if your crypto investment depreciates, selling at a loss can offer a tax advantage. Losses can be used to offset capital gains in other areas, reducing your overall taxable income. However, there are limits to how much loss you can deduct against your income in a single year; consult a tax professional for personalized guidance.
Beyond tax considerations, market volatility significantly influences the optimal sell time. Predicting short-term market fluctuations is extremely difficult. Long-term holding strategies, often favoured by those with a higher risk tolerance, are considered by many to mitigate the risk of short-term market downturns. Analyzing market trends, news events, and technological advancements impacting your chosen cryptocurrency(s) can improve your timing, but remember that no strategy guarantees profit.
Remember to meticulously track all your cryptocurrency transactions. Keeping accurate records of your purchase price, the date of acquisition, and the date of disposal is essential for accurate tax reporting. This will help you accurately calculate your capital gains or losses.
Tax laws vary by jurisdiction, so it’s essential to understand the specific regulations in your country or region. Seeking advice from a qualified financial advisor and tax professional is highly recommended before making any significant decisions about selling your cryptocurrency.
How long should I wait before selling my crypto?
Holding your crypto for over a year before selling is generally better for taxes. This is because the tax rate on long-term capital gains (holding for over a year) is lower than the rate on short-term capital gains (holding for a year or less). This means you’ll keep more of your profits.
However, tax laws vary greatly by country. The exact rates and rules depend on where you live. You should research your local tax laws and potentially consult a tax advisor to understand how cryptocurrency transactions are taxed in your jurisdiction.
Remember that cryptocurrency is highly volatile. Holding for a longer period increases the chance of significant price swings, both positive and negative. There’s no guaranteed way to time the market perfectly for maximum profit.
Holding for longer doesn’t automatically mean higher profit. The price of your cryptocurrency could drop significantly, even after a year. It is crucial to make informed decisions based on your financial goals and risk tolerance.
It’s essential to keep detailed records of all your cryptocurrency transactions, including purchase dates, amounts, and selling prices, for tax purposes. This will help you accurately calculate your capital gains or losses when you sell.
Can you realistically make money with crypto?
Let’s be clear: making money with crypto isn’t a guaranteed lottery win. It’s about calculated risk and exploiting market inefficiencies. Trading, while potentially lucrative, demands deep technical analysis and emotional discipline. Don’t chase moon shots; focus on identifying undervalued assets with solid fundamentals and strong community support. Diversification is paramount; never put all your eggs in one basket.
Beyond trading, staking and yield farming offer passive income streams. But research the underlying protocols meticulously; rug pulls and scams are rampant. Masternodes, while potentially highly rewarding, require substantial upfront investment and technical expertise. Due diligence is non-negotiable.
Volatility is the double-edged sword of crypto. It creates massive profit potential, but also the risk of significant losses. Understanding technical indicators, charting patterns, and on-chain analysis is crucial. Risk management is not optional; it’s mandatory. Set stop-losses, diversify your holdings, and never invest more than you can afford to lose. Consider dollar-cost averaging to mitigate the impact of price swings.
Finally, the regulatory landscape is constantly evolving. Stay informed about changes affecting taxation and compliance in your jurisdiction. Ignoring this aspect can lead to unexpected and costly consequences.
Can you make $100 a day with crypto?
Making $100 a day with crypto is possible, but challenging and risky. It’s often associated with day trading, which means buying and selling cryptocurrencies within the same day to profit from small price changes.
This requires significant knowledge of market analysis, including chart reading (candlestick patterns, moving averages, etc.) and technical indicators (RSI, MACD, etc.). You need to understand market sentiment and be able to identify potential price movements before they happen.
Day trading demands constant monitoring of the market – you’ll need to be glued to charts and news throughout the trading day. Quick decision-making is crucial, as opportunities can disappear quickly.
Consider the significant risks involved. You could lose money quickly if your predictions are wrong. Market volatility is extreme in the crypto world; even small errors can lead to substantial losses. Before attempting day trading, practice with a demo account to understand the risks and refine your strategies without losing real money.
Successful day trading also involves risk management. Never invest more than you can afford to lose. Using stop-loss orders to limit potential losses is essential. Diversification across multiple cryptocurrencies can help reduce your overall risk.
Finally, remember that consistently making $100 a day requires skill, discipline, and a deep understanding of the crypto market. Many traders fail to achieve this level of consistent profitability.
How do you know when to pull out of crypto?
Knowing when to pull out of crypto is crucial for mitigating losses. While timing the market perfectly is impossible, recognizing warning signs can significantly improve your chances of protecting your investment.
Three Key Indicators of Impending Crypto Disaster:
Negative News Coverage: A surge in negative news stories focusing on regulatory crackdowns, security breaches (like hacks or exploits), or major project failures is a significant red flag. Don’t just dismiss it as “FUD” (Fear, Uncertainty, and Doubt) – investigate the source and the validity of the claims. Persistent negative press often reflects underlying issues.
Deteriorating Technical Indicators: Technical analysis tools provide valuable insights. A prolonged downtrend, significant loss of volume, bearish divergences on charts (price moving up while indicators move down), and breaking key support levels all suggest a potential market downturn. Understanding and using moving averages, Relative Strength Index (RSI), and other indicators can help you identify weakening momentum.
Evident Market Manipulation: While subtle manipulation is always present to some degree, blatant attempts to artificially inflate or deflate prices should raise serious concerns. This could involve coordinated pump-and-dump schemes, wash trading (creating false volume), or other manipulative tactics that negatively impact market integrity. Keep an eye out for unusually large price swings without corresponding news or volume.
Beyond the Basics: Additional Considerations
On-chain Metrics: Analyze on-chain data like transaction volume, active addresses, and miner behavior to gain a deeper understanding of market sentiment and network activity. Decreasing on-chain activity might foreshadow declining interest.
Macroeconomic Factors: Crypto markets are sensitive to broader economic trends. Rising interest rates, inflation, or geopolitical instability can negatively impact the value of crypto assets. Consider these wider economic forces when assessing your risk.
Your Personal Risk Tolerance: Ultimately, the decision of when to sell is a personal one, heavily dependent on your risk tolerance and financial goals. Diversification and having a clear exit strategy are vital to successful crypto investing.
Remember: No single indicator guarantees a market crash, but paying attention to these warning signs increases your chances of making informed decisions and preserving your capital.
Is it smart to sell and rebuy crypto?
Selling and rebuying crypto, a practice sometimes referred to as “wash trading,” has significant tax implications, especially for US taxpayers. The IRS considers this a wash sale if you repurchase substantially identical crypto within 30 days of selling it at a loss. This means your loss is disallowed, and you cannot deduct it from your taxable income.
Key Considerations:
- Substantially Identical: This isn’t limited to the exact same token. If you sell Bitcoin (BTC) and immediately buy Bitcoin Cash (BCH), it might still be considered a wash sale depending on the IRS’s interpretation of “substantially identical.” The focus is on economic equivalence.
- 30-Day Rule: The 30-day window starts the day *after* the sale and ends 30 days later. Precise timing is critical.
- Loss Disallowance, Not Penalty: A wash sale doesn’t result in a direct penalty. It simply prevents you from deducting the loss, potentially increasing your taxable income.
- Holding Period: Even if the wash sale rule doesn’t apply, the holding period for capital gains calculations resets with the repurchase. This can affect whether you’re taxed at short-term or long-term rates.
Strategic Implications:
- Tax Loss Harvesting: Proper tax loss harvesting involves selling losing assets to offset gains, but adhering strictly to the 30-day rule is crucial. Consider selling assets that have no correlation to your investment strategy.
- Dollar-Cost Averaging (DCA): DCA strategies are generally unaffected by wash sale rules, as they involve consistent purchasing rather than immediate repurchasing after a sale.
- Tax Advisors: Consult a tax professional specializing in cryptocurrency to navigate the complexities and ensure compliance. The tax landscape is constantly evolving.
Beyond the 30-Day Rule: While 30 days is the standard, there’s no guarantee the IRS won’t scrutinize transactions occurring closer to the 30-day mark. A more conservative approach is recommended, particularly for larger transactions.
