How to Deal With “Fear” When Trading Bitcoin and Cryptocurrencies
How to Deal With Fear in Crypto Trading
One of the single biggest mindset challenges beginner traders need to fight is fear. Fear can affect your trading outcomes by affecting your decisions. This is why the first emotion traders to control is fear.
Smart traders quickly learn how to recognize it and deal with it accordingly. This is because fear is a very strong emotion, and one that’s very capable of casing traders to make serious trading mistakes.
This is why you’ll find that seasoned traders tend to control their emotions and appear rational. That’s because giving in to your emotions can result in huge losses. These crypto traders know that eliminating or reducing fear is good for them, as it will result in increased success and consistent profits.
Why Fear is Bad for Cryptocurrency Trading
If the aforementioned reasons aren’t good enough, here’s the more scientific reason. Research has proven that fear and anxiety can result in cognitive overload, which in turn affects performance on mentally tasking activities.
Crypto trading is a huge mental task and requires maximum concentration. As long as you’re trading, you’re burning up brain power. You need incredible mental stamina to continually win at cryptocurrency trading. Without that, you would consistently post losses; and no one wants that.
Because the effects of fear can be lasting, we’ve seen it play out time and again in many areas of business, trading, sports and life. In sports, it is frequently called the “yips”.
This is where a player goes from being at the peak of his performance to developing performance anxiety, which in turn, affects his ability to deliver and so on. The same goes for a trader that has been successfully raking in serious profits, only to lose a series of trades in a row.
That can damage their self-confidence, resulting in even worse performance. It’s a vicious negative cycle that can easily turn toxic. This is why you must guard against fear in your quest to profit from your cryptocurrency trading activities.
In fact, fear is the biggest challenge every cryptocurrency trader has to overcome. With fear, you will hesitate with trades, when you should swift and be effective. You’ll sell, when you should hold, and buy when you should wait. It completely compromises your judgment, resulting in poor performance and output.
You cannot under any circumstances, allow fear rule your trades and life.
How to Defeat Fear in Cryptocurrency Trading
Controlling your fear outs you on a fast track to professional cryptocurrency trader or investor status. This is what you need to do in order to enjoy more successful trades and have a profitable cryptocurrency portfolio. The following tips will help you control those fears.
- Understand the Market
The reality of crypto trading is its volatility. Unlike traditional trading markets like stocks, bonds, mutual funds, commodities and treasury bills, crypto is particularly volatile. This is often why many people become scared and wary if they’ve lost a few trades.
Just know that while the market might be volatile, you can use the volatility to your advantage. While many people think the cryptocurrency market will fail, the truth is they’ve been saying it for years. And yet, it’s still here today, going stronger than ever.
Understand that there will be so much fear, uncertainty and doubt about this market. That’s okay, because you need that to make your profits. Leave that to those who don’t know any better and see how you can use those sentiments to your advantage.
- Remember Everyone Makes Mistakes
Even the best traders make trading mistakes. Never forget this when you post a series of losses. Professional and seasoned traders all experience this time and again. But they know that like every downtime, it can and does happen.
When you experience a series of losses, what we recommend is step away from trading for a while –like the pros do- go recharge, and then come back to do your trading. While you’re away, find out what you were doing wrong, see where your head was at.
Figure all that out and then come back with a clearer head. Whatever you do, NEVER chase your losses. That’s the surest way to lose even more money.
- Do Your Due Diligence
Market research, particularly in cryptocurrency trading can work wonders for you. If you truly understand the technology behind the cryptocurrency that you’re trading, chances are you would be able to make the right call, 90-95 percent of the time.
This way, even if there’s a dip, market correction or even a bearish sentiment, you would still be able to hold on for as long as necessary.
- Use it to Your Advantage
Finally, use that fear to temper overconfidence. It is easy to become careless with your trades when you’re on a winning streak. With that fear keeping you in check, you will post even more profits and minimize your losses, because you’re not cocky.