It's always easy to confuse the way trading works these days. After so much digitization some people think that the trades take place mainly through logic, algorithms and so on. However, this is not necessarily the case. One of the most significant factors of trading are the human emotions that derive from it.
Try to imagine it. You just had an exchange and you bought some Bitcoins. Now you see that the price is falling rapidly, so of course, you feel it's time to sell it, but all the advice on the internet is telling you to wait and wait. This is where the first problem is encountered while human emotions begin to fight logic and difficult decisions.
You may have trouble believing if you've traded on other financial markets, but these human emotions can cost you encrypted prices. On other markets it is very difficult for these emotions to have a significant impact, due to how big the market is. But for criptos, the market is very small, so few selected investors could make some changes in the market if they buy or sell prematurely. Let's examine the main reasons why people face emotional, moral and psychological barriers when trading encrypted.
A primary example
In 2013, Bitcoin was comfortably seated on the $ 1,200 mark. But it fell 50% when the Chinese national bank announced it prohibit it in its systems. Everyone then thought it would be a fatal blow to the scrambled, but as you can see it was not even a scratch.
This was not the logic that influenced the price, and it was human emotions. Investors panicked and sold their assets immediately, fearing they were outdated when there were millions of people and thousands of trades in the world still accepting them. Do not take the information at face value, do the research, listen to the experts and find out how dangerous it is before making any significant decision. You will have to do it quickly, however, since the panic spreads fairly quickly.
Cryptos and morality are not the first things you would imagine to have a connection, but they do it honestly. Let's have a look with a different perspective. You just invested in a new encrypted company that released their last coin, and you already see that the development team is having some feuds.
This immediately turns on your good alarm, if you want to call it that. This gives you the feeling that maybe this company will go under if developers continue to fight. And you will not be the only one. Many traders are influenced by the company's policy when some drama occurs, and they find it very difficult not to have any concerns. The best thing to do here is to keep an eye on the way things develop, and if there are real threats that developers will leave to the company, then it's a good time to sell. Do not sell in advance, wait and watch.
Psychological issues, psychological problems
Human psychology is a fragile thing. Introduce it to any stress, and soon you will begin to see the cracks. Volatility usually creates cracks in the encrypted market. Many people fail to manage the mental pressure that comes from the fact that prices go up and down all the time. We are basic beings, we like stability and when everything goes as planned. When something goes wrong, we panic. Remember the first time you started trading. You probably spend the whole day looking at the rankings of your investment. The same thing happened to me when I first invested in Ripple and I looked at his cards all day. Every time you make a downward direction, I would have a mini panic attack.
The best thing to do in this case is to ignore it. If you have a long-term investment, always ignore the charts, stay focused on the news and how things develop. If you continue to look at the rankings it will take a huge toll on your mental situation, your conscience will push you to sell when there is a relatively large collapse, but after the sale, we are always sorry.
Another problem is when we are at a crossroads, going with the crowd or following our path. Usually, for a beginner, it is one of the biggest mistakes to trade against the trend and go it alone, as they do not yet have market experience. Even if it is burdensome to think about the mass of falling, especially in our day, it is better to get in line at the beginning.
Emotions we feel when we lose
The reason why this year we see such a massive crash of encrypted can be attributed to the emotions investors felt when they lost a lot of capital during the January crash. We as human beings tend to avoid more losses rather than pursuing profits. It is also psychological. It is more important for us not to lose $ 10 than to earn $ 100.
After the crisis, investors were very disappointed by the market and they avoided it altogether, selling their assets further and lowering the price further, which eventually created an illusion of reinforcement for disappointment and the decision to leave. .
How can you control yourself
If you are a beginner, it seems impossible to control you when the price decreases. What you need to do is try to become a little more patient.
First, try to avoid looking at the price every hour or day, think more long-term. When you look at the price, think about 1 month from now or even a year from today. It will calm you down.
When you see a feud in one of the companies, do more research. Find out why it happened and see similar scenarios in the past. If the past has left the company, you have a good source to support your decision. Do not just follow your instincts.
If you have lost some capital with criptos in the past, take a moment and trace it on a specific item or event that it may have caused. Once done, you will know exactly what caused it and you will become more prepared in the future. If you want to get back into the game, make a minimum investment to test the waters.