The most dangerous emotion for a deposit is greed. Greed is a product of stupidity, a consequence of a misunderstanding of intra-market processes and the psychology of the behavior of the masses.
1 shade - in search of ... “carrots” (an analogy with a donkey and a carrot)
Greed can arise when you know that someone is earning 10,000% on pumps, and you, let’s imagine, have already earned “only 60%” and you think – take profits or wait for more (everyone is waiting for carrots, don’t be like everyone else), this is a very complex psychological technique, on which a crowd is suspended in one place. What to do in this situation:
- Fixing the entire position, profit here and now and we do not look at the instrument until the price goes below the fixing price, there are many instruments, you have one deposit.
- Fixing most of the position, so you take the invested + get an immediate profit, and a small part of the asset remains with you in case of further price pumping. With a decrease after fixation, you can re-search for entry points and work in a conditional channel, accumulating the number of coins.
- Using stop losses. The position is already in positive territory, you do not want to take profit because you are waiting for more, you can put a stop loss below the current values, but so that when it is closed, the transaction closes in positive territory. In this way, you protect your profit with a stop, and do not limit losses.
We simulate the situation if greed wins - the deal is 60% in profit, but you are waiting for more, while doing nothing. First, the quote goes lower and the profit is no longer 60, but 30%, then 10%. Finally, the quote is already at the values
of your purchase price, but you do not go out, there is a dissonance in your head that you already had a profit of 60%. Further, the quote falls even lower and you are already at a small loss, you do not fix a small loss in the hope that the price will grow. Then there are big losses. Greed gives way to fear, then panic on which you fix already very large losses, they would not have to be endured if it were not for your greed.
If you move away and look specifically at this situation from the outside, it will become clear that this is a banal psychological device.
2 shade - a complete lack of patience and a plan
Probably the most difficult thing in trading is to just wait and do nothing. In a month, you can make 2-3 successful transactions and earn more than if you make 2-3 transactions per day for a month, such a paradox.
We simulate the situation - the price of the instrument you were watching collapsed to the level at which you planned to make a purchase. You have a certain amount allocated specifically for the purchase of this instrument. Initially, you planned to make 5 entrances at different levels. But today's price is much lower than yesterday's. You are thinking - if I make an entry at 20% of what was planned, the profit will not be as bright as if I enter the entire amount allocated for the instrument and ... You enter the entire amount, after which the price collapses by another 50%. You do not have free funds to make 4 more entries that you originally planned, which could significantly reduce the average price of entry into the asset.
Choice 2 - waste time (the main resource) waiting or fixing losses, in whole or in part. It's all about greed.
It is decided - discipline, lack of emotions and the presence of a plan. There are a lot of instruments on the crypto market. Favorable situations occur regularly, the market is cyclical.
Shade 3 - FOMO or Lost Profit Syndrome
We simulate the situation - you bought an asset, it so happened that you did it at the right time and the profit is already 120%, you overcame the greed of a conditional carrot and fixed a profit, cheers, but ...
You continue to watch the instrument, the growth continues, the growth took place by another 50% while you were watching, while you made the decision, the growth was another 20%. When the instrument has grown by 190% from your first entry, you re-enter the asset, without attaching importance to the fact that someone is already at least 190% in profit, but you are waiting for more. What is happening at this moment? - That's right, the quote falls below your entry point, you are at a loss.
Again, your greed and stupidity are to blame, as well as the refusal to adequately assess the situation.
We got a profit from the instrument, the price went even higher - we forget about the existence of this instrument until the price returns to the accumulation zone.
These are the 3 most common traps in the crypto market, these tricks are actively used against the crowd. The fact that you have read this article does not mean anything, you need to control your emotions. To accustom yourself to control and composure sounds pretentious, but it is a reality. No decisions can be made if you are overcome by emotions.
It's good to see someone post something like this. Yeah, people should know this and as always, "High-risk high reward" but in crypto, we need to learn many things and the most important thing is not to be a greedy person. 👍