Our own emotions have the biggest influence on our trades, but they may also be stopping you from achieving the great returns that you desire. Simply put, you can’t just get into crypto with no trading experience and do well in the volatile market without training your emotions.
You probably think to yourself “yeah I’m fine because I’m past the stage of FOMO buying and panic selling and there’s nothing more to it.” Wrong. There are countless other factors such as recommendations from big twitter accounts, new listings, new partnerships and believing that your coin will be used on a mass scale in a few years. A few people will be triggered over that last example, but realistically 70% of coins won’t be around in 3+ years and that’s coming from me who’s insanely bullish on blockchain. This isn’t to say that you can’t find the next Ethereum and prove me wrong, but the probability that you’ve found the “one” coin that will still be around is very slim and to me seems like a gamble based off your emotional attachment to the coin.
The fact that DOGE has outlived coins that were working on an actual use case shows that no matter how great you think your coin is, it’s still a free for all.
I know “investors” who have 99% of their portfolio in one coin due to their bullish bias thinking it will change the world. These are the type of people that when you try and point out a flaw with the coin they will get over-aggressive and not provide any real argument. Do financial advisers say “let’s put 99% of your portfolio in this because it has to do well, just look at it.” Strangely enough, no.
A big emotional factor that catches a lot of investors out is “buy the rumour, sell the news” but do people really think it’s going to be that easy to make money? A key example of this is the Verge announcement when they made a partnership with Pornhub. Personally, I thought this was a great achievement for Verge as they got their currency out into the “normal” world. I was also speaking to an adult actress who uses Pornhub for her work and she was asking for advice about whether she should change her payments, so she can accept Verge (strictly business in case my partner is reading this article (I’ll definitely be sleeping on the floor for the next couple of weeks)). Anyway, boasting aside, the price spiked in the run up due to FOMO and then dropped massively. Key tactic is to buy the early rumour and then sell when everyone else buys in due to hype.
Market sentiment indicator
It is insanely important to be one step ahead of the majority in these markets, yet people seem to be turning bullish when the price is high and bearish when we’re at a 6-month low. When the price is high, and everyone seems to be doing well is when you need to be bearish, when the price is low and everyone’s fed up of the markets is when you want to be bullish. I can’t stress this enough.
The other day I saw DGB spike up and a few people on trading view chatroom were saying “next stop 880 sats” whilst they were ignoring the lack of volume in comparison to recent attempts at that level and a huge bear div on RSI. It is always a wise idea to take peoples euphoria as an indicator to sell in combination with other indicators, obviously. Yes DGB has recovered well, but why would you not sell and re-buy more for the same price? I’ve seen this happen many times with coins like XRP, TRX and dare I say it, BTC.
By no means am I a God at controlling my emotions whilst trading, I hate being involved in coins that have no movement at times when the rest of the market is performing well. But there is also a fine line between changing trades because your coin isn’t moving as expected and over trading. Keep tight stop losses otherwise you will end up bag holding and saying to yourself “it’ll come back one day”. I have watched my coins rocket up many times and not bothered to take profit due to my daft beliefs that it could go higher- always have a plan of action.
Write down a plan of action for your trades, make your own decisions, take profits when the market looks good, don’t get rekt.