When someone mentions that a cryptocurrency is experiencing a rapid price movement we often want to jump on board to ride the wave. This can be profitable sometimes if you are early enough but it is not always a good idea to do this. The easiest way to relate is to say the old phrase “what goes up must come down.” This simply means that after a coin sees a quick move up it could see an equally quick move down. The folks who were lucky enough to buy in before the rally are the most profitable investors. The people who succumbed to “fear of missing out” or FOMO are usually the ones who end up with losses.
We have seen recently with coin project ALICE a 59% price increase during its initial launch period on Binance – but since its peak it has fallen over 80% leaving plenty of investors at a loss for days. Many investors probably displayed paper hands, meaning they could not bear the emotional discomfort that came with their financial decisions and forfeited their position for a loss. If you do not impulse buy then you should never have to turn paper hands. It is highly recommended to analyze a coin pair and do research prior to any investment.
FOMO doesn’t exist in just small cap coins or pump and dump schemes. Good old Bitcoin also produces FOMO on a regular basis. As Bitcoin becomes more and more popular we are seeing “experts” weigh in with their technical analysis. Some of them are calling the top of this cycle at $100k while others are calling the cycle top around $330k. The truth is nobody knows when the cycle will top out or at what price Bitcoin will be traded for when it does. Many of the influencers you see advocating Bitcoin have taken positions early on and are already far in profits. It does not phase them to see a pullback of any amount as they have invested heavily into the coin and will stick around for the long term.
A lot of times some of our favorite influencers can be shilling coins to us for their own strategic gains. Be weary when you see someone tweet or blog about any one specific coin and don’t take what is published as fact. You will need to do your own research both fundamentally and technically about the coin you are considering. If you DYOR and actually consider the consequences of your trade then you are no longer FOMO investing. Once you do your analysis and decide to enter the trade, do not do so with all of your available funds no matter how certain you may be of the outcome. This is a sure fire way to lose money quickly.
Timing any investment can be hard, especially if you want to go “all in” hoping for a big pay out. While many traders invest big hands and get returns on them daily, these traders are using technical analysis to map their trading ideas. They are not just impulse buying because Elon tweeted about a coin. The most beneficial thing you can do for yourself is learn. Learn more about Bitcoin and cryptocurrency so that you don’t impulse buy something. The more you learn, the more you can earn. You can find free resources and paid educational content at our website.
By viewing any material or using the information within this publication you understand that this is general education material and you can not hold any person or entity responsible for loss or damages resulting from the content or general advice provided here. Trading cryptocurrency has potential rewards, but also potential risks. You must be aware of the risks and be willing to accept them in order to invest in the markets. Only trade with funds you can afford to lose. This publication is neither a solicitation nor an offer to buy/sell cryptocurrency or other financial assets. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in any material on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Written by Edward Gonzales © Crypto University 2021