In this education article we will get all information about self control and psyhology in trading NFT.
The illusion of control
While trading NFTs isn’t entirely based on chance, opportunities are very common and people can make huge gains as well as huge losses. That simple phrase is not to be faded. We aren’t gambling, (well, even if sometimes we are) it’s not because you made huge gains that you have control. No one controls the market, not at our level.
Based on that, people overestimate the role that applying specific types of knowledge or skill might play in outcomes.
Keep in mind that no one knows the market at 100%, not even your favorite influencer. In fact, it can be your worst enemy.
Preoccupation is a recognized feature of most major conceptual models of addiction. Those who engage excessively in a particular activity often find it difficult to disengage from the activity. They may continuously think about the activity and prioritize it ahead of other important responsibilities. And crypto/nft trading appears to be an activity that has the potential to be highly absorbing.
“Buy what helps you sleep. Sell when it keeps you up.” – Gaius
Basically, when you purchase any asset you should be confident about your purchase.
For example, if your asset is tanking a bad -30%, you’re fine with it because you’re convinced of the future success of your investment. If that’s not the case, it means you’re not 100% confident and it will drain your focus.
On a side note, if your asset is tanking, try to understand why; market sentiment? community sentiment? maybe you could’ve managed to get a better entry? Turn every loss to your advantage and learn priceless lessons. Keep in mind that loss of momentum/price retracement is normal, a decreasing asset isn’t automatically a bad asset.
Fear Of Missing Out
This one will be easier with the help of a few pictures.
FOMO is a simple principle that needs a lot of knowledge and self-control to get over.
Overall, keep in mind that there are new opportunities every single day and that you’re missing out on 99.9% of them every day, you missed one? Let’s wait for a new one. Instead, get over it and use this missed opportunity to learn something. What goes up may go down and what goes down may go up. At any moment.
Let’s have a look at $DUST, from 08/24 to 08/30 the price was up only, Twitter went crazy and every single person on your timeline was telling you to buy $DUST for generational gains.
Should you buy some? If you’re a beginner, the answer is no. You missed this train, let’s wait for the next one. Your buy zone should’ve been somewhere in the red circle or before. When the market is euphoric, it’s time to consider an exit. When the market bleeds, it’s time to consider an entry. A large portion of traders aren’t successful, if you want to be successful you either need to go against people or you need to be among the first investors to discover a gem.
So okay, you missed this train, but you love $DUST, what can you do? The easy thing to do if you’re interested in this asset for the mid/long term would be to DCA over the coming days/weeks/months. Alternatively, if you already have some knowledge of trading, you could wait for a retracement.
In that case, we missed an entry, but FOMO could happen on exits as well.
Here, SOL price decreased in a few days, but that doesn’t mean that it’s a bad coin/project or that we’re doomed and that we should sell everything.
If you want to cut your position, people tend to wait for a little reversal to sell. That’s not necessarily a good idea.
As an example, instead of going across a -30% and selling at the next +5%, it would’ve been a better move to cut your position at -15% or -20%. That’s why risk management is super important.