- Is cryptocurrency a good investment?
- What do you need to know about trading psychology?
- How to overcome fears and risks in crypto trading?
As a trader, you come across many various fears and risks. You are investing your hard-earned money, and the fear of losing it can make you anxious. Besides, if you are a crypto trader, the level of risk reaches the top floor.
Why? Because crypto markets are highly volatile. You never know what will happen the next hour or the next day. One day crypto prices can skyrocket; another day, it can plunge hard.
So, the question here is how to come out of fear and risk factors in crypto trading? Well, let’s find out how you can do that.
What do you need to know about trading psychology?
Human psychology plays an essential factor in our lives; this differentiates us from the rest of living things. Psychology becomes a more critical factor when you are trading. Limiting emotions, quick decisions, and being patient and disciplined is what trading psychology is all about.
As a trader, you can understand that you often have to make quick decisions. Snap, and you’ll miss a trading opportunity. To get over this, you need to have a strong presence of mind. You need to follow your trading plans and be disciplined in trading.
You may have heard about FOMO. It means fear of missing out. When a trader gets some news about a specific cryptocurrency, some of them jump to conclusions. They want to ride the wave and don’t wait.
However, things can get messier as people enter at the wrong time. The сrypto market is relatively new and unstable. This means that the number of people who trust in their potential determines the value of most coins.
As a result, unexpected changes in market mood lead prices to surge and fall dramatically, giving what you may perceive as an option to get rich quickly.
For instance, let’s take a look at the Dogecoin chart. When Elon Musk tweeted about Dogecoin, the price jumped to new highs. But as you can see, the price came tumbling after the high of May.
This kind of behavior often reflects human greed. There’s a famous saying on Wall Street that “pigs get slaughtered.” It means that greedy traders hold their positions for too long that they want to suck every profit out of it.
Is there a way to overcome fears and risks in crypto trading?
Yes, but you need to follow some guidelines. Here’s how you can overcome your worries and risks.
1. Trade with a plan
When the psychological crunch arrives, you must establish and adhere to guidelines — set guidelines for when to enter and exit trades depending on your risk-reward ratio. Set a profit objective and a stop loss to remove emotion from the equation.
Furthermore, you can choose which certain news events should prompt you to purchase or sell a company. It’s a good idea to set daily limitations on how much you’re willing to win or lose. If you reach your profit goal, grab the money and flee. If your losses reach a certain threshold, fold up your tent and head home.
2. Don’t glue yourself to screens
Have you been spending too much money on cryptocurrency trading in the expectation that one day they’ll travel to the moon? Then you most likely require a mental detox. Try taking a break and doing something else intriguing for a time.
Remind yourself that life is more than just making money and planning for the future. Instead, bring your attention back to the present moment by playing a game, working out, or going on a short journey with your pals. Slowing down can help you overcome the risks of trading.
3. There’s nothing wrong with losing
To overcome your concerns, recognize that nothing is sad or bad about passing up an opportunity now and again. On the contrary, it is a normal part of any trader’s experience, especially starting out.
While most traders prefer to share their success stories and keep their losses to themselves, you should also recognize that they have lost money. It isn’t easy to forecast what will happen to the price tomorrow in this market. As a result, losses are unavoidable. All you can do is stick to your trading plan to minimize them.
4. Back to the drawing board
Every emotional trader has a history of failures that they would rather forget. We suggest you go over this history again to understand that anxiety is to blame for a lot of money being lost (rather than earned). As with any profoundly ingrained fear, it causes us to behave quickly and without thinking.
5. Do some digging
If you want to become a long-time crypto investor, you need to know about cryptocurrencies that interest you. Keep up with the news, educate yourself, and, if feasible, attend trade seminars and conferences.
Give the research process as much attention as necessary. This entails analyzing charts, reading trade blogs, and conducting background research like historical data of BTC. Knowledge can also assist in overcoming fear.
6. Resist the urge
When it comes to making money, many beginners listen to their feelings rather than their minds. So if you have a strong feeling about a coin, avoid the temptation to buy it right away.
Sometimes our well-intentioned subconscious takes over our reality and compels us to make awful choices. So, resist the urge to buy any meme coin.
7. Assess yourself
Finally, you should evaluate your performance regularly. In addition to assessing your returns and specific positions, you should consider how you prepare for a trading session, how your current trading positions are going, and how far you have come in terms of continuing education.
This evaluation can assist you in fixing mistakes, changing poor behaviors, and increasing overall results.
Overcoming fears and risks in crypto trading aren’t tricky. First, you need to gain crypto knowledge, compare its pros and cons, and understand that losing is part of trading.