A new approach to investing into cryptocurrencies
A new approach to investing into cryptocurrencies
Since investing is about rationality and buy beliefs on the first level, the real decisions about buying and selling get made on the second level: the sub conscious.
So the best investor is a heartless Person without any feelings and only rationality, but no person actually is.
To get a balance about rationality and feelings the goal for investment is to let every investment be a what to your why:
My "why" is to empower the individual and my "how" is Blockchain Technology, so every investment should be a "what" to my why. (Simon Sinek - Start with Why)
This is more crucial than many would expect, especially in a market like cryptocurrency where prices go up 500% in a few days and go down 50% in a few hours. Even with maximal rationality the feeling of a 50% loss or more will strike every time, and this is why buying high and selling low is highly accurate in this market.
The only way to play the market and don’t get played by the market is to emotionally detach yourself from the price fluctuation to the downside.
This is surely more simply said than done but there is a solution: If you think your cryptocurrency is the greatest thing since sliced bread you don’t care if the price/market goes down 10-50% because you know that the evaluation does not cover your beliefs anyway.
A simple example is a reddit post one year ago from someone holding Ethereum:
He was concerned because Bitcoin nearly tripled in the time Ethereum did nothing and asked the community what was up, others answered that Ethereum would be "dead" and had seen its "greatest times"… A normal decision based on this impression of the market would have been to sell Ethereum and buy back BTC.
As you can see now on the Charts Ethereum lost nearly 30 percent, and in the short term this decision to sell must have felt very good like a “winner”...
Half a year later Ethereum would have given 35x its investment (if sold at the top) while BTC only brought 7-8x (sold at the top).
What we learn from this story is that this market wants to persuade you in the short term and if you let it, it fucks you in the long term.
So the challenge is to ether HODL careless of 30% losses or Trade with high pressure and uncertainty - I think the mix makes the sauce.
Don't forget to like and leave your opinion in the comments :) Hope you enjoyed this post
I enjoyed this read. Thank you.
Truth is, trading these are not very difficult because the markets are not as manipulated as stocks. The question really comes down to if you have the stomach to hold out the rides. That doesn't just go for selling; a common mistake is selling when you get 1% gain getting excited and worried about a reversal, but taking 5% losses on a bad trade.
You're right many take small profits and big losses. My approach is just to Trade with cryptos I truly believe in so that my stomach can easily handle these 20% drops and take 50% profits instead of buying those shitcoins you dont believe in anyway just for the FOMO.
I actually made this really cool excel doc that helps me day trade ALOT. My excel doc allows me to just type the numbers in and see right when I can flip a quick buck. I've been working hard on it the last couple days trying to get it just right, and it's already proven itself, got a free 100 bucks in the last couple hours sitting around.
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