31/10/2020
INVESTING IN CRYPTOCURRENCIES AND EMOTIONS
By Sender Torres
Have you ever seen pictures of a movie about buying and selling stocks on Wall Street?
Surely yes, currently Bitcoin and Cryptocurrencies are bought and sold through Exchanges or Internet Brokers, something similar happens with the shares of companies on the Stock Market. Those who are dedicated to this business are traders and you have to study to master the technique of trading.
The Cryptocurrency market offers traders great profitability, which can even exceed 20% in one day, but to obtain high profitability the trader must also manage his psychology since it can intervene in profits or losses in investment due to that if you allow yourself to be dominated by your emotions, you will sell the financial asset before making a profit for fear of losing money and obviously you will have losses for selling precipitously or selling the asset late.
The above should not happen because the trader, prior to the purchase of the Cryptocurrencies, has had to carry out technical and fundamental analysis of the cryptocurrency in which he will invest, with this analysis he will know until the price of the asset in which he will invest.
These two analyzes are the two main types of stock assessments that help traders to understand the future behaviors of the cryptocurrency.
The first one is based on statistical data and the second on fundamentals or news related to the value of the asset.
The psychology of trading is all those mental aspects that affect investment in financial markets. Trading psychology is what undoubtedly differentiates winning traders from losing traders.
Let's remember that trading is made up of three fundamental pillars: analysis, monetary management and trading psychology. To have a brief idea of the importance of this third pillar, it is enough to make a simple assumption.
If after having done the previous analysis we discover that the price of a cryptocurrency should increase by 10%, for this we buy the Cryptocurrency, but when the price goes down, fear can be experienced and blinded by fear, the trader can close the operation before that reaches the target selling price analyzed. But later, the price rises to where we had expected, so it will have presented a loss or will have lost an opportunity to win.
Therefore, emotional stability is key in investing in cryptocurrencies. Without proper trading psychology you will miss out on winning opportunities. The following are the negatives and positives of emotions in trading that will determine a trader's success.
The positives are acceptance, trust, discipline, and focus. While the negative aspects are: anxiety, attachment, greed, hope, impatience and fear.
According to how you manage your emotion it will be represented in the profits in your trading.
