Since the popularity of crypto, interest in trading & investing has also increased, but as with every business cycle, usually the majority of people just have Fear Of Missing Out and enter too late. This rule is fundamental in every business decision and so often missed as proven by behavioral economics.
People make a few simple mistakes when it comes to trading & investing, they sell too early or they sell too late, regardless if a position is profitable or not. Too early can also be too tight of a stop-loss and too late can be simply no stop-loss and a bad exit.
Taking this into account, markets are not supply and demand but more like a hype train, sometimes a marketing ploy but definitely not rational and players are emotional, irrational and lack proper risk management strategy.
Also, traders, especially in crypto, have horrible diversification, this starts by not seeing the correlations between Bitcoin and the rest of the asset class and the lack of value and liquidity in the next hype coin.
Classic Economics is based on flawed assumptions that people make rational informed decisions, but the opposite is true. This applies across the whole spectrum of decision making in human history.
Knowing this it is important to distinct herd from the rest when interpreting information to make any kind of prediction and factor in a percentage of risk that comes with any fortune talling. But are markets even predictable at all?
Knowing that markets are behavioral we can at most skew the odds in our favor by being more unbiased about things like news stories and hype and also put things in place (like a trailing stop-loss) to prevent making the same mistakes as the herd. Maybe even use sentiment indicators whether qualitative or quantitative to look for clues.
Markets are the exchange of goods and services and follow the laws of business cycles, they inflate and deflate because people become complacent or world circumstances affect economic conditions within countries due to the fragility of international order.
Lots of fake teaching authorities claim they will have the secret recipe (especially in crypto) but the truth is unless you control the information you can only try and see through the manipulation and look at the organic business or "emotional" cycle and assume a risk in every trade that you do, markets are a dangerous place for ego.
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