Bulls and Bears, greed and fears!

We went in one week from a phase of particular greed and FOMO (73 points), to a phase of fear and tension (32 points).
The decline to date has been about 13% compared to before the September 7 crash, very normal percentages for Bitcoin and also healthy for the medium term movement.


Those who know this market would not be surprised by a -13%, and even those who entered a few months ago should have already experienced what it means to be -50% from historical highs (see peak of April 2021).

Instead, the fear is there and it's felt immediately by many. The inexperienced expect to enter the market and see the price rise vertically without retracements or as with cryptocurrencies without seeing sharp drops, even up to -70%.

This denotes some characteristics of novice investors:

  • the ability to remain objective and calm for many is still difficult, as when you go in profit you do not know how it happened but often enters the self-belief of knowing how to invest well;
  • when, instead, you suffer a -50% you do not know how to behave and often you sell at a loss without a valid reason.

In addition, a capable investor, before entering the market has a strategy of buying and selling that is not based on momentary fear but on the deep knowledge of the asset that you are going to buy.

An inexperienced investor enters the market on sentiment or following the crowd, which is a fatal mistake.

In situations like those of September 7th one does not know what to do and instinct comes into play, which naturally leads to protect oneself in case of fear, but leads to losses that could be avoided with simple strategies or with an elimination of the emotions of the investment (such as periodic purchase plans that allow to mediate the entry price in the medium-long term).
One way to calm yourself in particularly difficult situations for novices is to close the chart and not think about it. If the first thought after this statement is: "it's hard not to think about it, I'm losing too much money" it means that the exposure to the asset has been excessive, going beyond one's ability to invest.

Furthermore, if you really believe in the asset, to keep calm you should look at the chart from a longer time frame. Surely looking at a 1 hour chart during a crash is not positive, instead, looking at a 1 month chart will make us understand the true extent of what happened. Many experienced and successful traders think in candles of days or even weeks.
Personally I never put more than 3% of my portfolio on a single trade, it can happen instead to make several trades on a single assett but with different entry and logic or to take advantage of a particularly favorable moment, this allows me to mediate the risk that a black swan can occur, see the example of XRP in the SEC affair, today officially closed. In a moment like that I studied the matter, I found information and when XRP was worth USD 0.28 I entered with a second tranche that partially mediated my previous entry at USD 0.56, then both closed at USD 1.26 and then reopened at USD 0.90. In traditional markets positions like this make you get a headache, but I diversify my portfolio, I don't only have XRP or crypto but also small investments in equities and commodities. Putting all your money on one cyclical or counter-cyclical sector does not maximize profit, the key is to diversify and deal with sharp declines in a cool way. Initially this can be very difficult, but with time you can develop this sort of detachment from the abrupt movements that characterize cryptocurrency markets (even I developed it after banging my head against it many times).

These are the tips I've tried to follow since I've been trading in the cryptocurrency markets.

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