When the cryptocurrency market dumps, many feel the sting, not just those in front line proximity. Having investments on the line can stir all manner of emotions at the best of times. And while the good times are glorious, the bad days can devastate. Emotional responses are understandable, but traders need to be weary when it comes to dealing with the aftermath. For many, the blame game is a go-to, with excuses being flung left, right and centre. Take a single step back and consider such behaviour for a second. It certainly doesn’t fit the technical spec of a good trader. You might indulge the whims of a rookie trader still wet behind the ears as he runs off a long list of guilty parties responsible for his setback. Even with more established entities on the trading scene, this is a common response. Sadly however, the bold words of a trader ranting his ego back to life can cause disastrous domino effects.
When enough audible rants reach enough inquisitive ears, a whirling wind can become a hurricane. Now firmly entrenched in the era of social media, such opinions can reach worldwide audiences in the blink of an eye. No matter how ill-conceived or illogical a rant might be, it runs the risk of causing a panic. Cryptocurrencies are still seen as a risky venture and a highly volatile market. Those brand new to the cryptographic world can succumb to scaremongering in moments. Either they ditch their endeavours completely and turn their back on the crypto world or go above and beyond to minimise potential risks as they navigate crypto investment potential. In essence, they refuse to play ball with a cut-throat market populated by manipulative minds out to play them. Of course, that’s not necessarily the reality of things.
It’s little surprise when things snowball. With an atmosphere of negativity, cynical outlooks all round and a misanthropic approach when it comes to other people, a subsequent decline is to be expected. Imagine a trader caught in the midst of that pressure storm of pessimism. When emotions are running high as standard, and not in a good way, sensible trading practices go out of the window. Instead, they’re replaced with erratic behaviour and knee-jerk decisions often based on irrelevant factors. When the losses begin to pile up, these emotional flames become a righteous fireball. Losses are disregarded daily and blame is directed at just about everywhere bar its rightful destination. To dismiss any lingering notions of bad judgement, said trader might only up his blame game until any sense of self-doubt is a distant memory. But a trader bulletproofed against sane reasoning will make the same mistakes again. Then they’ll make worse mistakes. Their adaption to their failure becomes even more desperate as any notion of managing risk is firmly done away with.
That’s an on the ground reaction. Move out from the mechanics of the market and you’ll see how the rest are reacting. Every man and woman with a social media account and perceived cross to bear against the market are becoming as red-faced and ranting as the trader. A single shouting voice online is soon joined in its chorus by another perceived victim, then another and another. In their heated online dialogues, many are tarred with the guilty brush and blamed for their losses, even if a considerable cross-section of that ranting chorus knows this isn’t the case. But when an anonymous commentator tips a nod of solitary, battered egos are boosted. Once again, like the trader, the embittered investor has externalised the issue. Any sense of personal responsibility in the matter has long since faded.
It’s not the most flattering thing to admit, but it’s understandable how people can get caught up in these emotional episodes. However, there’s also a few tactics to employ to help steal yourself against the storm should it hit. For a start, shelve social media as your first port of call for insights and learning. If you’re serious about educating yourself, the printed word will always pay dividends when consulted.
When it comes to general tips, the oldest advice tends to be the sagest. Never risk more capital than you’re prepared to lose. Express restraint when it comes to trading. When it’s not the right time to be trading, take a step back and study instead. More importantly, make sure you’re honing the person you are into someone who’ll be able to ride out the storm should things take a turn for the worse. Anchor yourself with humility, learn to be patient and anchor yourself with humility.
Paranoia won’t help anyone navigate the volatile waters of the cryptocurrency market, but a keen sense of scepticism will. A good dose of objectivity will help you immensely, ensuring you make better decisions going forward. Perhaps more important than anything else when starting out is patience. You’ll need to demonstrate to deter yourself from overtrading when you shouldn’t be, while it will also serve you well in a general sense. Give yourself the time you need to dissect every potential decision you might make if you sense any kind of doubt or hesitation. You won’t always make the right decisions, even when you’ve taken a step back and practised deep breaths in times of market crisis, but come out of the other side of it without losing your head and you’ll be a much sharper trader for it.