Are you new to cryptocurrency investing? Is this your first time witnessing a fairly large correction in the crypto markets?
DO NOT PANIC!! These are perfect signs of a healthy and growing industry in it's mere infancy. Try not to let your emotions and fear take control. Human psychology is a dangerous thing, and there are common mistakes that people make over and over again in the heat of the moment, or when subject to stress or temptation, to fall into one of these mind traps. Take a step back and think long term. In 3 - 5 years, if the total market cap of this industry is 1 trillion USD, you will be happy you managed your emotions and held strong.
So what are some of these common mistakes?
- Sunk Costs
'I might as well keep eating because I already bought the food' ... I like this analogy. This is about psychologically protecting your previous choices or decisions, which is often disastrous for your investments! Do not become emotionally attached to some of these start up projects and ideas raising mega money via ICOS. In due time, some of these start up projects will cease to continue, and their respective coin will decrease in value. Do not be afraid to sell at this point. Keep up to date with relevant news channels to avoid missing out on decent exiting levels.
- Anchoring
Anchoring is the use of irrelevant information as a reference for evaluating or estimating the value of your crypto currency. In the absence of better information, investors often assume that the market price is the correct price. People tend to place too much credence in recent market views, opinions and events, and mistakenly extrapolate recent trends that differ from historical, long-term averages and probabilities.
- Situational Blindness
People who are not specifically seeking confirmation often just shut out the market realties in order to do nothing and postpone the awful day when the losses just have to be confronted. If you know deep down that there is a problem with your crypto currency investment, but you read everything possible except information pertaining to your investment, you are probably suffering from this blinder effect.
- Superiority Trap
For some people, the superiority trap is extremely dangerous. A lot of investors think they know better than the experts or market. Just being well educated and/or clever does not mean you don’t need good advice/insight. I recommend subscribing to youtube channels hosted by experts with years of experience in the crypto currency markets.
Thanks for reading! Diversify, study and stay focused my friends!