Greediness and impatience are two related psychological phenomena’s that are potentially the cause of those red numbers in your portfolio. While these thought patterns are also present in the stock markets, cryptocurrency traders might be even more susceptible to it.
Especially the last couple of months, the crypto market has drawn the attention of a growing audience that is completely new to trading financial products. Together with the high volatility and the widespread media attention of cryptocurrency, this lack of experience causes unnatural amounts of greediness and a lack of patience among crypto traders. Let’s look at the precise definitions of greed and impatience as well as their link with the crypto market.
Simply put, greed is the desire to get things that you don’t really need, especially in a selfish way (source). In times of market growth or growth of your portfolio value, humans are typically inclined to buy more or wait longer to see even higher returns. Unfortunately for them, markets stabilize after a time of growth and the portfolio value of the investor is dropping in value before he/she sold it. The persisting greediness made the investor hold on too long, causing losses during a bear market. This is where impatience kicks in.
Impatience is defined as not accepting delay or being restless or short-tempered (source). Impatience can lead to ‘over-trading’, buying and selling excessively because you don’t want to wait or you already see ‘better’ opportunities. In addition, an impatient trader is thinking less clearly. The impatience causes the trader to buy a declining market too fast because he/she thinks it will already turn into green numbers.
If these psychological concepts are not under control, they can lead to stupid decisions like the aforementioned trading mistakes, but they can also lead to borrowing excessive amounts of money for example. In the end, greed and impatience are another reason why it is very important to know your own trading behavior and never invest money into cryptocurrency you cannot afford to lose.
Note: Greed and impatience generally apply to short term trading. Long term trading or HODL tactics (my favorite) are logically less affected.
Im liking how you are educating people on this subject. Its not a get rich formula, it take time and patience.