The emotions called ‘greed and fear’ are the main players in the crypto market. These two emotions are the driving force behind almost all market participants including Institutional investors, brokers, investors and traders.
You might be saying to yourself that greed and fear will never get in the way of my trading, but have faith in it or not they will be. It is not something to be ashamed of. It is something you have to admit to, come face to face with, if you want to become a successful crypto investor or trader.
How to recognize the fear and greed in the crypto market trading arena?
You have been observing a particular project and its performance for some time now. It has set up without a glitch, so you pull the trigger. You bought it at the right price and now it is moving higher just as you thought it would.
Here and now greed steps up to the plate and says to you, this is going to be a spaceship. As a result you buy some more coins. Or your coin moves a few points and goes passed the price that you decided to get out. Greed conveys you this coin’s price is going higher tomorrow so you hang on.
When cryptocurrencies make strong moves to the upside greed from all the cumulative market participants joins the move.
Cryptocurrencies prices usually fall quicker than they move up, and when this happens, fear now steps up to the plate.
Let’s have a look at the illustration explained above, where your coin’s price went through your get out price and you held on because greed was by your side. The next morning the cryptocurrency price breaks down. There is heavy selling all morning long.
Greed is telling you to hang in there the price will come back. The price keeps going down, now you get a knot in your gut, and your projections are turning white. Fear is now by your side, but by now it is too late, your enjoyable profit has turned into a loss.
Every trader or investor goes through this until they have become proficient at the horrible aspects of greed and fear.
Make sure that you have obtained an adequate knowledge before you get confused by volatility. Once you are good at dealing with fear and greed, you then are well on your way to becoming a prosperous crypto trader or investor.
This information is for Learning purposes only. We are indeed not financial mentors. It should not be considered legal or financial advice. You should consult with a financial advisor or other professional to find out what may be the finest for your individual needs and risk tolerance.
Please do your own research.