Cryptocurrency Mindset – Prepare Yourself for FOMO/FOMU
Do you have the right investing mindset? The explosive rise of cryptocurrencies like Bitcoin and Ethereum is even more impressive. At the start of 2017, Ethereum was priced at a paltry $8.33. Today, however, it’s risen to over $1500 at the time of writing and the sky is the limit!
With gains like these, it’s easy for investors to get caught up in the buying frenzy and give in to their FOMO, or fear of missing out. It’s also common for investors to stay on the sidelines and miss out on opportunities due to FOMU, or fear of messing up.
While a healthy dose of both of these “fears” is great as they keep you ready to analyze and pounce on solid opportunities that come your way, investing emotionally out of fear will only get you in hot water in the end.
Your mindset is important in anything you do, but when it comes to investing, it’s critical. Without a healthy mindset, you could digest decades of theory and allow one bad investment to bust your account and ruin your confidence.
You’ve heard it before, but I’ll say it again, “Slow and steady wins the race.” These are words every investor should strive to live by.
FOMO – What Is It?
It may sound like Hip Hop slang, but for investors, it’s much, much worse. Along with its cousin, FOMU, FOMO is the cause of billions in losses each year.
When overcome with the fear of missing out, it’s all too easy for an investor to get caught up in the hype surrounding a currency, commodity, or stock and jump on board the train with little to no thought. After all, the price has been going up for four sessions in a row, so it has to continue, right?
So, what do they do? Nine times out of ten, investors stricken with FOMO end up buying at an asset’s peak price, only to lose money on a sharp reversal. Worse yet, fear of missing out often leads to a fear of messing up, in which positions are held for far too long in hopes of a turnaround. All too often, this leads to huge losses, margin calls, and retired dreams.
Don’t let FOMO get you down. Here’s a list of proven investing mindset principles guaranteed to help you overcome your emotions and trade cryptos like a pro.
It’s a Marathon, Not a Sprint
If you view investing as a get rich quick scheme, you’ll end up nowhere fast and out hundreds or thousands of dollars.
Investing is a marathon that takes patience and persistence to succeed. If you treat investing like a 100-meter dash, you’ll burn out in no time at all.
So, do your research and take your time. In the end, your hard work will pay off dividends!
Never Go All-In
While similar in a number of ways, investing is far from a game of “Texas Hold ’Em.” Unlike poker, you can’t bluff the market and go all in to make up for a loss. This is FOMO to the extreme.
If you’ve just suffered a loss, take a deep breath, step back, and stick to your strategy of building your account through smart decisions and tactical plays. It will pay off in the end.
You Can’t Win All of the Time
Like many, when I began investing in stocks and cryptocurrencies, I thought I knew what I was doing and would win most of my trades right from the start. However, it didn’t take long to realise nobody wins all of the time.
Thinking your strategy is foolproof and getting bent out of shape over a few losses is a fail-proof way to lose even more. Respect the fact that you will lose from time to time and take each loss as a learning opportunity to improve your mindset, strategies, and win/loss ratio. This is the key to success.
Cut Your Losses and Ride the Winners
While it’s important to understand you’ll experience some losing trades, it’s even more important to learn how to cut your losses, take a minor blow to your ego, and move on. Not doing so can drain your account balance in no time at all.
It’s equally important to learn how to ride your winning trades and squeeze as much profit out of them as possible. Unfortunately, many investors succumb to FOMU and exit too early.
This may seem like common sense, but following such sage advice is often easier said than done.
Do Your Due Diligence
Whether it’s Ethereum or a blue-chip stock, research what you’re investing in. Don’t assume just because the price has risen or fallen considerably that it will continue to do so. The more research you perform, the better your investment decisions will be.
Ask yourself questions as well. Why did the price reverse? How can I improve my strategy? By continuing to learn and ask questions like these, you can all but guarantee your trading success.
Cryptocurrencies are nothing to fear. However, in recent times, the explosive growth of the crypto space has led to a deluge of questions and changing psychology amongst investors. Like any type of investment, volatile cryptocurrencies can be easily tamed with the right mindset and make sure you learn the bitcoin basics.
To achieve success as a cryptocurrency investor, you shouldn’t fear the market, but you also shouldn’t jump brashly into it. Instead, approach each cryptocurrency or other investment opportunity carefully and do your due diligence. Always remember, nothing goes up forever.
FOMO stems from the anxiety or fear that you’ll miss the boat unless you invest now. With blockchain technology surging in popularity, acceptance, and price, a number of investors are currently dealing with FOMO regarding the cryptocurrency space as a whole.
To combat the hype and volatility, you must understand blockchain technology and its future potential. Sure, with the right mindset you can make some sizable short-term profits, but only when you become a true believer of blockchain’s potential should you make a long-term investment into the coins behind it.