We take you through the basics of crypto trading psychology and how to make sure you are trading with the right mindset. Make sure to apply these principles or otherwise you will lose. Apart from reading crypto trading books and attending seminars, there are other factors that define a winner in the crypto market. Critical among these factors is traders’ crypto trading psychology.
A trader’s crypto trading psychology determines his/her success rate. With the continuous struggle of the crypto market in 2018, it is key that traders are always in the right state of mind. Therefore, crypto traders should not make decisions when their judgment is clouded with emotions. Hence, we will be taking a look at the ways a trader can develop a strong crypto trading psychology.
Fear and Crypto Trading
In the crypto market, fear is both good and bad. By now you must be feeling confused- how is fear a good thing? I know that we have been told all our lives that fear stops us from achieving greatness.
However, in crypto trading, it is okay to fear what you don’t understand. Allocate a greater percentage of your portfolio to assets that you have been able to figure out. Be more cautious when you are allocating your investments to newly discovered coins.
On the other hand, fear can also stop a trader from grasping opportunities of making huge profits. Traders are sometimes too cautious because they do not trust their instincts. Fear can make a trader ignore all the signals and indicators that show that there are more profits to be made.
Therefore a crypto trader that lets fear influence all of his/her investment decisions will unlikely make huge profits. Being extra cautious is okay in a bearish market like we are presently in, but in a bullish market, fear limits a trader’s profits.
Greed and Crypto Trading
In crypto trading, the opposite of fear is greed. A greedy trader always wants to squeeze all the profit out of an investment. Greed can make a trader go the extra mile to make profits. A trader’s greed would make him/her attempt investments that many people in the crypto market wouldn’t dare to try.
There are times that this pays off, they make profits that many in the crypto space could only dream of. However, when traders choose to only see the potentials of an investment without factoring indicators that show that thing might go horribly wrong, they often lose on a grand scale.
Greed as its place in crypto trading, but it should be controlled and checked. A trader should analyze market signals and indicators before letting greed take over. Sometimes, it is wise to be content with little profits.
Regret and Cryptocurrency
Regrets stem from missed opportunities to make profits or cases of huge losses. Regrets of missed opportunities or failures will always hinder a trader from moving on. Yes, you have missed a golden opportunity, but you have to understand that the crypto market is a reservoir of opportunities.
When you learn from previous missed opportunities, you will approach the next one as a better trader. Traders that allow regrets of past failures to dictate their decisions tend to become excessively too eager/too scared to utilize other opportunities.
Intuition and Feelings In Crypto
There are times when you let your intuition help decide the possible outcome of a chart. Our brains are programmed to recognize patterns. Therefore, if a chart looks similar to the countless your brain has registered, your intuition will likely conclude on its possible outcome.
However, every intuition should be analyzed and verified with market trends. When the two corroborates, then the probability that your intuition is right is high. Traders that rely only on intuitions are most likely relying solely on chance. The best way to go about it is to back up your analysis with your instincts.
The more experience a trader garners, the more his/her instincts comes to the fore. In a way, intuition stops us from trying too hard to see patterns that do not exist. Therefore, it is important to separate instincts from emotions.
Emotions which we can also call feelings originate from personal sentiments. It is very risky when a trader relies solely on his/her sentiment or feelings. A better approach is to analyze the market’s sentiments on a coin or an investment.
Apparently, there are times a trader believes that a coin will experience a price surge because he/she thinks that the asset is viable. This is a decision solely based on feelings and there are other factors that should be considered before taking a leap.
One key thing that sets a successful crypto trader apart is his/her mental strength. They have conditioned their minds to analyze situations with facts and figures, therefore they are hardly found at the losing side of the crypto market. In addition, successful crypto traders have had years of experience, so they are able to weather almost every storm they encounter.
How Can A Trader Develop His Mental Strength?
I will advise that traders should set up guidelines that will clearly define the factors that will determine when they buy or sell an asset. It is also important that crypto traders put a daily limit on profits and losses. Once any of the limits are reached, then a trader should close for the day. This will effectively curb greed. In addition, it is imperative that crypto traders keep experimenting. This will help traders understand their strengths and weaknesses.
However, I will advise that all experiments should be contained (i.e. not excessive). A trader should review his performance from time to time. Instead of focusing the review on profits and losses, a trader should also take time to review his research fundamentals. Particularity, his decision-making skill and analysis process.
Finally, it is very important that a trader access vital information before deciding on buying or selling an asset. Analyzing this information will help a trader identify times when his judgments are influenced by the Fear of Missing Out (FOMO) or emotions.
As a result of this, we have set live trading crypto trading signals that will help traders numb their emotions while trading. By simply signing up here, you can get all the analysis and indicators that will help you develop your mental strength.