Perhaps one of the most well known aspect of trading cryptocurrencies is that it can be a risky venture. Almost everyone finding their way into the crypto world as I love to call it, will have come across this fact from the very beginning.
Does it mean only risk takers can venture into it?
This was actually one of the disturbing factors I had to learn and relearn. Unlike most businesses where you already know that there's a risk factor, most people had to deal with an unhealthy fear of investing or not during their first crypto buy.
The market is volatile and perhaps your friend who first introduced you to trading is looking for some level of Incase things do not go as planned. So he or she continues to drum up on the risks and gives you all the reasons why it could all go wrong, so that you know just what you're getting into.
After a few losses here and there along the line, you've finally understood what it's all about and can now finally take risks.
But this post isn't even about the fear of taking risks, it's actually about people who feel they've gotten to a level where they can risk it all. The Fearless Warriors.
I learned a valuable lesson just last year during the bear that a certain level of fear and level headedness can be quite healthy when making trading decisions. Sometimes being overconfident of knowing too much is a risk in itself.
There's a certain term that time and time again has proven to bring out the greed in even seasoned traders and that term is ROI (Return On Investment).
I've seen people who I thought knew it all loose their common sense when they see the possible return of certain investments.
If it smells like a Fish, there's chances that a fish is somewhere around
Taking risks is part of trading, but a lot of times if it doesn't feel right then it probably isn't right. There's no need to be blindsided by the gains.
No pain, No Gain? Trust me there'll be a lot of pain later when you're making investments only based on the possible gain and not the percentage of risk involved.
I got a call from a cousin just about a week ago asking if I had about $300 to spare. $300 at that time was about #250,000 naira (at 834 per dollar).
I had to ask what the money was for and I eventually got the gist.
Apparently there was this site where you could invest and copy an AI trading bot. All you had to do was put in funds and the bot would do the rest.
At that point, I wasn't familiar with how AI trading bots worked for either forex or crypto platforms so I decided to ask some questions. How does it work?
Alas a definite explanation wasn't available for me. The only real information I could get was that you didn't need to stress and that people were making money.
It seemed there was no information on the downsides and risks whatsoever, the only information available was that I could make money.
This was someone who has so far had his fair share of experiences in the crypto market, but hearing the word AI has made him cocky and only focused on the making money aspect, forgetting his funds could just as well be lost.
So far I've learned that although every business is out there to make profit, a healthy dose of fear and common sense sometimes helps to minimize taking unusually risky decisions.