I thank @fendit for this lovely class. It's good to always learn something new to correct your mistakes for the future. Before this class, I was ignorant of Fear Of Missing Out (FOMO) and investing blindly because someone said I should.
Before we start the homework task let's learn something new too. There are some terms we have to take note of in the crypto market. We have the fear of missing out, overtrading, stop loss, and revenge trading.
Taking then one after the other:
Fear Of Missing Out:
Cryptocurrency is volatile. It changes from time to time. its price can increase at the time you are sleeping. Due to this uncertainty in the market, it leads to people feeling that this should be the right time to trade since the price is currently high. But they are forgetting that it can also go high and they can make more profit.
Fear Of Missing Out makes people either rush to sell their coins due to afraid of loss or they will see the value of a currency dropping and since it is dropping let me invest it will increase later.
The cryptocurrency isn't controlled by emotions but by critical analysis and the monitoring of the cons facts to know its
state in the future. This what should be done to be able to overcome FOMO.
Crypto is a business many talks about. They say you make money if you invest much. This makes every beginner in the market rush into investing without critical analysis. They invest blindly thinking every investment will bring something at the end of the day. The market is monitored for a while, then you get to know when is the right time to go in. one can wait for prices to go down to invest. But not buying it at a higher price waiting for it to increase.
Crypto trades deal with confidence and when you feel it's right to trade. Trade when you are in your right thinking and analytic state.
We know very well if we overtrade, we can make a loss mostly. This is what leads to revenge trading. Revenge trading comes in when we want to get our money back or makeup with our loss at all cost. At this point, we don't think critically to analyze and make decisions right but we just invest to make sure we get our money.
We don't invest the money we can't afford to lose into crypto. It's a market where the currency is volatile so we should make sure we invest with what we can lose so we will be okay at its turn out. Either positive or negative.
Stop loss is technically setting up a maximum loss that automatically liquidates assets when the value of the currency reaches that point. This helps an individual monitored the currency and plan to prevent higher loss in the future of the market.
Considering all these mistakes, we have to put things in place before getting into the market. We all have our aversions to the risks state. Now your but don't let it deceive you into overtrading and FOMO. Let's trade when we are in the right state.
Back to my homework task;
Okay looking at the chart, first I might not take it easy. But I know my aversion to risk and its moderate. I like profit and I take higher risks to make my profit.
I also know we have various ways we take to analyze a market before going into it. I use fundamental analysis to determine which market is good for me. With fundamental analysis, we consider, the management of the currency, their history with the business, their policies, and other factors. It only considers those who manage the currency and how they do it without actually minding the current value of the currency.
I know the price might decrease. I also know it might increase. But looking at it and analyzing it using fundamental analysis I would have been at peace and know very well along the line I will get my money back with extra profits.
Now after this class, I would have thanked myself for not making a mistake of FOMO.
For the mistake I have done, I think any new user in the crypto platform has done a mistake at least once to learn something. I remember when @farhmade introduced me to steemit. I was in for business and I was always monitoring to see when will be the right time for business. The value for the steem dollar then was 7$. I waited for an increase.
One day I woke up to see it at 8$. I was happy. I thought it was the right time for business. I hurried and performed a trade. I felt big because I thought it would decrease at any moment. Time passed. The next day, I woke up to see 1 SBD equaling 10$. I was amazed I thought if I had waited for one single day but due to FOMO, I didn't.
This is the mistake I have ever made in my crypto journey. What I have learned is, to be patient with time and the coin. If there is instability in the coin doesn't mean anytime it increases it will decrease next. Now I know it can decrease and increase at the same time but doesn't follow a pattern of the eyes. It should be analyzed critically to be able to do away with all the mistakes of trading.
The one I will go for is not letting our fear or greed take control of us. After the mistake I made, I realized my taste for more made me lost an opportunity to have made higher the next day. When one can go by this strategy, I believe he or she will get the best out of the crypto market.
Before this class, I would have jumped into business blindly without weighing my chances. Since the price of bitcoin is increasing, if I can make a trade getting some bitcoin, I will make higher money as it continues to go higher.
After the class, I will realize we don't overtrade because a currency is shooting up. It can also decrease at any time. I will now take my time to analyze and understand how its increases. With a stable mind without emotions, I then decide to join the trade or not.
This was a lovely class and I have learned and discovered my mistake. I don't think I will make such mistakes again. All thanks to @fendit for such a wonderful lecture.