Trading cryptocurrency (or any market for that matter) goes against everything natural.
From human emotions to psychology, it can often take years of fruitless attempts to train your body and mind to act in ways conducive to promoting profit before seeing any moderate success.
Often, the best move is the one that goes against our comfort zone. Whether it is as an outlier or learning to control emotion, successful trading requires mastery of the mind.
Mastering the Markets Boils Down to Psychology
The harsh reality is that only a mere 6% of people make it as professional traders, due to a multitude of factors.
However, the vast majority of these select few who managed to find success in trading any market will tell you that despite these many factors, it often boils down to one thing: psychology.
And thus, one of the most crucial philosophies behind trading psychology is that of herd mentality.
Mastering the Herd Mentality
Simply put, herd mentality is definable as a tendency for the behavior or beliefs of a group of people to conform to the group of peers to which they belong – herd mentality is common practice throughout many aspects of life.
For example, fads are born because everybody else is doing something. More or less, people want to be involved.
The same is true of trading in crypto markets (see: Dogecoin).
Learn to Spot Trends & Follow Narratives, But Don’t FOMO
A primary factor behind the cryptocurrency markets that have recently exploded in such a dramatic fashion is at least partially thanks to the perpetuation of new ideas.
People tell their friends and family about a new thing (in this case, a cryptocurrency) and how it is, quote, definitely the next big thing – this has lead investors time and time again to develop classic examples of retail FOMO (fear of missing out).
When trading, emotions are powerful and can sometimes be of good use.
However, keeping the emotions in check and using a pre-established strategy, calculating the upside versus downside, and assessing the risk in every situation is an essential skill.
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