Trade is 90% of emotions, and new cryptocurrencies always cause fright, especially if this is the first thing that users ever had to trade, Jonathan Morgan said in the publication Coin Clarity.
Many investors, for the first time, decided to invest their money in something that showed insane growth during the past year. Of course, this was a pleasant surprise for those who bought their Bitcoin for $2000 in July last year, and then saw the rise in its value on December 10 times! Many investors experienced such euphoric feelings.
But when Bitcoin began to fall rapidly from its maximum height of $20,000 to almost $ 5,000, many investors panicked.
But, as the author of the publication states, this was quite expected and predictable if we analyze the development trend of the market, which can be broken down into certain stages.
Relative price stability
If we consider the stage of relative stability of the price, it is clear that at certain moments there are bursts of growth in value. What does this mean?
Everything happens very naturally. Professional traders representing individual companies and funds begin to create euphoria of growth for ordinary users, selling that part of the Bitcoins that they bought at old prices, but at a higher cost.
Their goal is not just to sell their coins at a more expensive price, but to lure inexperienced investors into a trap when they are afraid to miss the moment of profitable investments.
The moment of declinE
Further, behind the rise in value is the stage of falling prices. This is the most important period for the trader, after a temporary cycle of growth in value.
Do you know what this period is a common user when prices fall day by day?
Fear, Anxiety, Depression, Sleepless nights, Frustration
Now friends in the crypto community do not seem so happy. Some cannot cope with the excitement and make people nervous. It is painful to see how the price curve stubbornly creeps down.
You want to continue to hold, but prices continue to decline. You try to start analyzing what is happening and repeat it like a mantra:
“It cannot last long, things will soon get better. He must recover! “You hate those people who keep saying hold (hold on no matter what).
This is a field of market torture, which affects all who have acquired their cryptocurrency at the very peak of its price rise. In this trap, most people fall who are amateurs in the field of crypto-currency trading, but professionals count on them.
When all hopes are exhausted, a new phase begins.
Veterans of the crypto trade, professional traders, representatives of large funds and companies see that they have almost cracked down on amateurs, or scared them to death.
Do you know who is worse than the frightened user at the earliest stage of the recession? The one who still hopes to wait for the next rise. They are called pens. They are desperately afraid of losing their money, but they are going to wait until the time when they can return the investment.
However, when a decline in prices passes a break-even point or an acceptable loss point, they do not have enough exposure and they start selling their cryptocurrency at a lower price, which provoked a fall in prices, thereby benefiting professional traders, funds, and companies.
Mentality Necessary for survival
As noted by professional trader Jonathan Morgan:
“I went through hell before becoming a real independent trader, starting the first steps from my home office. I know the suffering and painful experience of losses. Crypto-currencies are cruel and excessive in their fluctuations. But we need to worry more about the fall in prices than about raising.
Digital currencies are the most speculative market in our life. If you are worried about money that you lose by investing in this market, you are already pre-arranged to lose them. There will be a moment when you will almost certainly be sure of your loss. It is better, then, to use the long-term investment approach.
Be happy when prices rise, and rejoice at it.
But be happy also when prices fall. All professional traders look forward to and even expect a price reduction. Yes, the drop in value is bad news, but learn to love these periods when one can see cheaper positions that are worth buying for a long-term perspective.