At the end of 2017, early 2018, everyone bought Bitcoin and other coins, altcoins. In the last 14-16 months, more than a year, however, sellers were the majority in the market of most cryptocurrencies. What happened if you always went with the others? Many of them bought a Bitcoin for over ten thousand dollars, and then sold it for around $6,000, or 3,500-4,000 in the worst cases.
Following the crowd
Many researches had shown that small investors tend to go with the crowd. When they hear how high the price of something has gone up, they also go shopping to catch the opportunity. To make the same gains as others. This is the famous FOMO, the fear of missing out phenomenon mentioned so many times in the big hype. And when they read about the crash, my God, everything collapsed, nothing is worth anything, there are terrible price drops – then they panic and sell all.
Yes, just like the ones who bought Bitcoin for over ten thousand and sold it for a third, or a quarter of the original price. But we could also mention that many people bought Steem at rates between $2 and $4. And sometimes the same people did not dare to buy it in last autumn, around 20-30 cents.
Be strong and independent
What is the solution? You must be strong and able to resist the general mood, the fancy of the crowd. If you are convinced that the investment you have chosen will be good in the long run, do not let yourself get out of it. Don’t let yourself “shake out” of your investment by some price spikes or pits.
Most investments are not only about a month or two, even in the very fast changing crypto-world, it can take a few years before positive changes happen, the next tops approach. (Or negative, as shown by many unfortunate examples of cryptos. I wrote about this here today.)
You need psychology
Investing is a special, unique science, natural talents exist but there are only very few. Most of the top investors are good at it because they have practiced and learned a lot. (As it is the case with most other sciences.) If you don’t learn about it, you must learn everything on your own. If you learn about it, with books, articles, courses, you can learn from the mistakes of others. So you can pay some less for the tuition... paying with losses can be much more expensive.
How do we start? A good solution is simply to search for “investing psychology” with Google or DuckDuckGo. One of the first hits is the article “8 Psychological Traps Investors Should Avoid” by Investopedia. This gives a fairly good answer to why investors tend to follow others, copying the mistakes of others or insisting in wrong ideas.
(Photo: Pixabay.com)
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