I use to quite often compare the attitude towards investing and sometimes trading as well in crypto, of many of us, with the one of a gambler. I consider that very few of us have a plain and simple, long term, driven by a goal investing strategy in relation to crypto. Crypto markets are still like a colorful casino where you can hit jackpots, or smash the door out broke.
I have been to quite a few casinos over years and I have my share of winnings and loses as well. I'd say that after quitting such activities, which happened in the summer of 2020, I might have beat the casino's ass, leaving it on a profit, and could say that I've changed lanes right before hitting the wall.
Some of that gambling mentality still lives in myself and it's easily reflected in my trades. Let me tell you of a quite recent one to better understand what I'm referring to. It's a XRP case so if you have an allergy to Ripple and XRP you'd better skip this post. I'm not a fan of Ripple nor XRP, but I do once in a while bet on it.
A few weeks back when XRP fell out of heaven thanks to SEC filling a $1.3 billion lawsuit against Ripple I thought I should jump into a quick trade with it. I bought a 3x long on Poloniex, 192 XRP bull to be more precise, and was absolutely sure the shitcoin will bounce back and will make myself some good money. It didn't...
I invested around $400 buying these 192 XRP bull at around $3.2 a piece at that time, if I remember correctly, and it kept on falling right after my purchase. Haven't exited the trade though. A couple of days ago XRP has pumped again in a quite well organized pump and dump scheme and that's were my gamble mentality kicked in.
At some point my XRP bull got to over $5 a piece and my investment had doubled in value, and at that point something in me whispered to sell and buy some LTC or more UNI with the profits I got, but no, the gambler mentality took over the wheel and said $900 is too cheap for the hustle. Lets make it $9,000...
A few hours after I took the decision to not close my XRP bull(3x long on XRP) trade, when I opened the Poloniex app and had a look at my wallet... all the bulls were valued at mere $400... pretty much from where I started a few weeks ago. No problem, it's just weak hands selling and the price will once again go up, I said to myself.
It didn't though, and now that whole trade is worth $163 :)) Haven't closed it because at this point it's not worth any longer. I'll just ride my lottery ticket all the way, but had I listened to the quiet investor's voice in my head whispering me to sell I would have doubled my investment and buy some real crypto with that money.
This gambling mentality hasn't yet died out in my tinny brain and my little story in this post is a lesson learned for me and hopefully for you as well. There are rare cases when coins pop over 200% in one day and keep on doing that for several days, hence you need to take profits from such trades or at least set some stop limits when finding yourself in such a situation.
I've related this experience with my quite short gambling experience because I recognized the feeling, that dopamine driven sentiment of wanting more, of lifting you out of the ground, hazing everything around and the only things of relevant importance for that moment being a screen and a hand continuing emptying the pocket.
Realistically speaking I still believe that many of the current cryptos out there will score 20Xs or more during this bull market, but most of that growth will occur over time. Have a look at LINK, DOT, RUNE and others that sit comfortably on nice hills of price appreciation, but none has got there in one day.
Taking profits off the table in a trade is best strategy I would recommend myself. The market does what it does, not what you want it to do. It didn't give a shit about my $40 per XRP bull price target yesterday. The FOMO kicked in prior to when the pump was scheduled by the XRP army and the dump that followed was painful.
Not crying over this one, as I'm not gambling my main portfolio assets, I have a quite well nailed strategy with my cryptos, but it's sure a good lesson for trading and a clear indication that crypto is still a shinny full of lights casino in the mind of many of us. Hope you're having a fantastic day and wish you great trades.
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Thanks for attention,
Adrian