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Psychological errors in trading crypto currencies

How to be successful in trading crypto currencies.
October 13, 2019 - Reading time: 5 minutes
Psychological errors in trading crypto currencies

Crypto currencies are currently a booming market for financial experts and interested investors. The high volatility makes it possible to make fast profits, in addition, fast losses. As with most financial transactions, only the people who make the fewest mistakes win in this game. Therefore we branch to you here the most frequent pitfalls, with which the psyche can play a trick on us with the trade with crypto currencies.

The masses are almost always wrong

We humans tend to do what others do. This gives us a sense of security to do the right thing. History has often shown that most people make mistakes. For this reason, the wealth in almost every society is so distributed that 20% of people own 80% of the money.

Therefore: think - stay always logical - no emotions

Do not believe a guru

Financial markets are sometimes like lottery games. Someone hits the 6 out of 49 and wins a large sum. But is this due to his superior intellect? No, not really. In retrospect, anyone can give reasons about how his successes came about. But often there is also normal happiness.

It is important to understand the facts and to form your own opinion and then enter the business. If you lack the knowledge, you can rely on automated trading software such as Bitcoin Superstar. It is said that this software automatically recognizes signals and then tries to interpret the data without emotion.

Fear of missing out - effect

Many people are afraid that everyone else will get something while they themselves go away empty-handed. This was also the case when the Internet bubble burst in 2000. At that time, people ran to the bank unsuspectingly and bought all kinds of shares. Only because prices had risen for so long that they were afraid they would be the only fools not making profits.

Don't be carried away by such emotions into ill-considered actions. Rather follow crypto currency news and inform yourself about the latest developments. Then enter the market if you think it makes sense and not because you are afraid to miss something.

Fear of your own success

Some investors are uncomfortable with the success of their transaction. They then sell their crypto currencies much too quickly and do not exploit the full potential of their investment. With crypto currencies, single-digit profits are usually not the end of the story.

Selective perception

We live in a time in which there are more sources of information than the Tagesschau at 20.00 o'clock. This means that we can be flooded with pros and cons on any topic throughout the day. Unfortunately, however, people tend to form an opinion and then only look for information that confirms what they have invented.

Of course, this is extremely unfavorable if it is obvious that a trend has completely reversed. Waiting for the bottom to be reached after a major slump and for it only to go up is a mistake. Sometimes one must be ready as an investor also to take up and process also unpleasant messages.

Anti-cyclical thinking

Most hypes reach a point where a trend turns into a self-fulfilling prophecy. The price of a paper is rising, so everyone assumes that it will go on forever. So more and more capital flows into the market and prices continue to rise. Everyone feels confirmed in their opinion.

The most important thing as an investor is to anticipate exactly this point in time. Andre Kostolányi once said: "If the bus driver gives you a stock tip, then it's time to get out." It's similar with crypto currencies. There has been a lot of money flowing into this market today. But it is still a market that is largely populated by insiders and exotics.

Whether at some point the phase will come in which every human will have Bitcoins in his possession, cannot be said. But the trend at the moment is that money is still being pumped into the market, which usually leads to more to come.

In addition, the market is becoming more stable and professional. There have been several attempts by large investors to manipulate the market. These last attempts have failed. This suggests that conditions are returning to normal and that the market is becoming more efficient and rational.

This also makes it interesting for investors in the future.

Disclaimer

All information without guarantee. This is not financial advice, but only my subjective opinion.

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