If you keep your eyes on the crypto markets daily, there always seems to be a huge gain for a coin as well as a huge loss for another coin. Look at all the recent Bitcoin Cash drama for example. People start to panic and either sell at a loss or they want to catch that big "gain-train" and buy in at the top of the price because they don't want to miss out. When large swings of volatility hit the market it is of the utmost importance to maintain the right cryptocurrency trading psychology so you don't fall into many of these common traps & pitfalls. Keep reading as I talk about some best practices for beginners just getting into the crypto space.
Accept The Risk
First and foremost, you must "Accept the Risk". Now repeat it again to yourself...
Accept the risk!
Cryptocurrency investing is risky, plain & simple (less risky then trusting the government with your money, but that's just one 'Stache's opinion!). Playing the Stock Market is also risky. Driving in your car each day is probably the MOST risk you take on a daily basis, but most of us don't bat an eye at this fact. If you start by personally accepting this risk and making your internal psyche aware of this fact, you can begin your journey understanding what you stand to lose. The golden rule is "don't invest what you can't stand to lose" and following this lets you stay focused on the goal: profits.
Don't Fear The Reaper
The second pitfall to avoid is the massive amount of Fear, Uncertainty, & Doubt that gets spread around the investing world. Make no mistake, there are large players out there, or "whales" if you prefer, that will try to manipulate the markets to their whim. They use news outlets and social media to spread FUD (Fear, Uncertainty, & Doubt) so they can take advantage. This is nothing new, and it happens in just about every investment industry. The real difference is cryptocurrency is still in it's infancy so there is much less regulation and more speculation.
Blindly listening to other people about how this coin is going to fall and this other coin will now be "king" will only lead you down the wrong mental path. You need to have a plan!! Do your research, don't take just a few peoples opinions (including MINE!). Everyone is susceptible to giving into FUD (even The 'Stache), and all we can do is learn from our mistakes and keep trying.
You Are NOT Missing Out
When you see that massive gain on the Bitcoin charts and think "If I don't get in NOW I will miss out!", take a step back and use that brain of yours. The Fear Of Missing Out, or "FOMO" as its called, can be a strong driving force in peoples decisions. Fear is a major part of the basic human psyche and it has saved our human butts many times over. This same type of primitive fear can be triggered by FUD and FOMO events in the market. People are confused, they don't know what to do, they stop thinking and maintaining that right trading philosophy, and THAT is where bad decisions are made. There will ALWAYS be another time to buy and another time to sell. Don't go chasing waterfalls or rocket ships to the moon! Patience and research are your friends on our long crypto journey
Screw Your Expectations
If getting rich quick is your plan from the start, I strongly suggest you re-think that (use that brain thingy we talked about earlier ok?). There is NO get-rich-quick anything. If someone is trying to sell you that BS, walk away immediately. We need to keep a handle on our expectations, in particular when you are new to cryptocurrency, so we keep things realistic. If you are just starting out, expect to lose. Then do your second trade and expect to lose again... I know this may sound counter-intuitive, but loss is just part of the game. The thing that matters is that you learn from it. Learn from each mistake you make and then do better next time. I have made plenty of mistakes along my way as well (see articles here about my Litecoin FOMO, and how I lost a bunch of BCash), but I have learned from each mistake and resolved to do better next time. Expectations can be hard to overcome, even for myself, but recognizing your unrealistic expectations is the first step to combating them.
Stop Messing With My Emotions Smokey!
Unless you are from the former planet Vulcan, you probably make some life decisions based on emotions. Trading on emotions can be quite dangerous as it puts us in a vulnerable state that makes us WAY more susceptible to the above mentioned pitfalls of FUD, FOMO, and unrealistic expectations. If you become emotionally invested as well as financially invested the markets can easily drain you of both. Identify that you have become emotionally attached and take a step back. Let the logic wash over you. Having emotions can be a boon in many cases, but trading on emotional impulse will most likely end badly.
Maintaining the right trading psychology can be a tricky balancing act, especially in a very volatile market. The first step is to accept the risk, then steer clear of FUD & FOMO news advocates, keep your expectations in check, and understand that emotions can play a part but not rules your decisions. No matter how hard we try, ALL of us will fall for one of these. It is what we do after that defines us. Will you learn and prosper, or will you be doomed to repeat the same mistakes again and again? The 'Stache is here to help you learn and prosper, but don't just take MY word for it do your own research too!
'Stache That Crypto Before You Get All Emo!