Be Confident
Everyone wants to be rich, but at some point your investments will lose money. The losses can seem more impactful than the gains. Prices can’t go up forever. Understanding your risk tolerance, and withering the storms, will help prevent the losses from stacking. Being successful sometimes means being willing to hold through the losses.
FOMO is power, but so is FUD (Fear Uncertainty and Doubt).
An important part of investing is taking the emotion of out it. But, taking out the emotion requires you confronting why your are anxious or emotional in the first place.
Being confident
Having confidence in your decisions is one of the most important aspects of trading successfully. When prices start you may start to sweat.
- Ask yourself these questions:
Do I have too much invested? Am I overleveraged?
What is my timeframe?
Have I done my due-dilligence?
If you are not comfortable with the answers to these questions, then you have a problem you need to rectify.
When you can be confident about your answers to all of these questions, minor dips or even large ones aren’t going to bother you.
Am I overleveraged?
Have you invested more than you are willing to lose or are financially comfortable with losing. If the answer to this is no, then you should stop. At this point you’re no better off than betting it all on black at the roulette table. You should not be spending your rent money or money you desparately need on crypto. If you’re spending more than you are able, then a dip could be your unravelling. While crypto can also be financial freedom, it can also be your trip to the poor house if you’re not careful. Take a risk, but use caution.
What is my timeframe?
Getting in now makes you an early adopter. However, prices will rise and fall as with any market. How long are you willing to hold onto your investment? If you’re worried by a dip or a price fall, then your timeframe may be too short. It takes companies decades to raise billions of dollars, to build a massive userbase, and to change the world. As it stands now even Bitcoin, the first cryptocurrency, has only been around since 2008. Ethereum has only been around since 2013. Etc. Think long term. Think about what it means for this technology to truly change everything and how long that could take. When you have a vision like this, dips are no longer terrifying, but opportunistic. Think about your long term-strategy before freaking out over price changes.
Have I done my due-dilligence
The reason you may be tempted to sell your crypto when prices fall is because you don’t know what you’ve bought. You may have fallen for the FOMO. When you know that the decision you’ve made is a good one in the long term, that can only come from DD, you will be less tempted to sell. You will be less willing to accept a loss and hold through the rough patch. If you bought Ethereum cause everyone was talking about it, a dip is daunting. If you know the ins-and-outs, and the possibilities it holds, and everything you can know, you will be unfazed by swings.
Final remarks
None of this is to say that you should blindly hold through periods of loss. YOU SHOULD NOT. What I am saying, is that you may feel tempted when prices drop to cut your losses. You will feel pressure to fold, to admit you are wrong. You should cash out when you are ready, but you should not miss the forest through the trees. Even Apple, Microsoft, and Amazon have bad days. Be confident in your decisions, find your strategy, and stick to it.