Long Term View: Avoids The Emotional Pitfalls

in LeoFinance2 months ago

Most of us awoke today to pure carnage in the crypto markets. Things are certainly fun when they are flying. However, when markets reverse course, it is often a painful experience.

To start, we must remember that nothing ever goes straight up. There are fluctuations along the way. Secondly, this is magnified in cryptocurrency by the fact that it is so volatile.

So how do we avoid the emotional roller coasters?

Stephen Cohen is one of the leading hedge fun operators on Wall Street. He recently made news with his purchase of the New York Mets baseball team for close to $2.5 billion. Obviously, he is one who is accustomed to the swings in markets.

During one of his first interviews as owner of the new ballclub, this is what he had to say:

“But I never get too low,” he said. “When I’m on a real great streak, I never get too high either. You’re never as good as you are when you’re doing great, you’re never as bad as you are when you’re doing poorly.”

There will be setbacks along the way. Anyone who achieved any degree of success knows this. Problems arise and it takes working through.

Nevertheless, if we are to make great changes, we have to take on challenges. Playing it safe does not yield enormous results.

Cohen went onto to add:

Continuing with his thoughts on business Cohen remarked, “Playing it safe is no fun, it’s actually boring. Being afraid of change is not a recipe for being as great as you can be. I’ve always been a risk-taker…All these decisions are about making intelligent risks.”

Source

We all want to win. However, there can not be that without taking some losses. It really is that simple in life. No matter what the field, when one has to take a chance, there is the opportunity that things will not go as planned.

Traders are well aware of this. Each time one puts a trade on, there is the risk of losing money. Yet, at the same time, there is equal chance of making money. This is where risk assessment and money management enters the picture.

For those who are not into trading, there is another option. When looking long-term, the minor gyrations matter little. Let us look at Bitcoin to see how perspective alters things.

This is the 24 hour chart on Bitcoin.

bitcoin.png

That is pretty ugly. It is enough to make one want to eat his or her shoe. Time to cash out and buy some low yield CDs for safety.

However, before we make that move, let us look at another chart.

Here we see the 1 year chart of Bitcoin:

bitcoin.png

That obviously looks a lot better. Notice the areas highlighted on the chart. There were two moves during the past 12 months that were equal to, or worse, than this drop.

It is worth nothing that each of the previous moves preceded a much larger move up.

For now, the Bitcoin bears took control. There is no doubt about it. However, markets are a tug-o-war between the bulls and bears. Just as quickly as the bears took over, the Bitcoin bulls could grab it right back.

Here we see the value of taking a long-term view of things. In the moment, we can think things pretty bad. Unfortunately, the "moment" can last a while. For example, there are times when rough patches are experienced for 3 or 6 months. It is painful to endure that. However, as long as the organization survives, at some point, that stretch is in the rearview mirror.

Remember the battle with Justin Sun that the Steem community had to endure. Now, as we near closing out 2020, that is a distant memory. Nevertheless, it was not easy to go through at the time.


Source

Many often discuss the "buy the dip" approach. However, for that to be possible, there needs to be dips. Looking at the 1 year Bitcoin chart, we can, in hindsight, see where the buying opportunities were.

Long-term perspective enables us to sort through a lot of the noise that is often driven by emotions. When on a winning streak, as Cohen said, it is best to not get too high. There is a guaranteed setback somewhere along the line.

At the same time, when there is a sea of red, it is best not to get too low. This is normal activity for markets.

Here is the challenge for using price as a barometer for what is taking place. Markets are designed to go up and down. For all the research into the logic, the truth is nobody knows why they do it other then buyers taking control from sellers and vice versa.

That said, when looking at projects, what is being done is crucial. Follow the process to determine who things are unfolding. Markets are often mispricing things and that is common. To try and fight it makes no sense either.

However, equally as inane is to hang on every move in the markets. There will be ups and down. Often buyers or sellers have no insight into what is happening with a project. Instead, they are just doing what market players do.

As always, be careful out there.


If you found this article informative, please give an upvote and rehive.

gif by @doze

vision2025.png

Posted Using LeoFinance Beta

Sort:  

If you are involved in crypto you should know volatility. Every crash bottoms higher than the last low. 20-30 percent returns is unheard of in normal markets.. these markets are not “normal”

Flash crashes in the stock market make news.

In crypto, that is just another Wednesday.

I had to learn that a 10% drop in crypto is nothing..a minor fluctuation.

Posted Using LeoFinance Beta

Everyone says buy the dip but when the dip comes, people get scared. Then the ownership of some coins changes, strong hands remain strong while weak sell their coins and brave finally get their coins!

I got some RUNE! I'm thinking I'm brave!

Posted Using LeoFinance Beta

I have a premonition we'd end 2020 on a high and why so I think so, this is simply because we've seen corrections as we awoke to the bloodbath and even the alt coins were far more worse. In reality people are shocked because they didn't see this corrections earlier, but then there's a tendency that it'll be bought back up in a few days. The bloodbath is going away soon.

Posted Using LeoFinance Beta

We all want to win. However, there can not be that without taking some losses.

Reading users crypto story here on Leo, you'll see how many have burnt themselves one way or another, BTC, Steem, Hive, you name it. This is inevitable at first as people jump in, hoping for a big profit. That's the tuition fee.

Posted Using LeoFinance Beta

Markets are wonderful teachers if we pay attention to them.

It is those who tend to be arrogant and think the market was wrong that tend to go broke. The market is in charge and that will never change.

Posted Using LeoFinance Beta

I couldn't believe the drop on the market this morning after asking around and all the people saying that we have better fundamentals, we are not near as 2017 and that we can only rise. And it seems that the history repeats again once more. We will still need to see if the drop will continue and maybe be smart this time and buy low and sell high. We shouldn't be greedy anyhow...

For me on the emotional level I feel the same now as I didn't intend to sell any of my assets. A token is still a token and I intend to keep on gathering until I reach a specific threshold.

Posted Using LeoFinance Beta

Well it isnt as if this is a huge crash, at least not at this point. We will have to see how things go the next couple days.

Bitcoin neared the ATH resistance and backed off. This is common. Let wait for another run at it. It is not uncommon for it to take a breather and "power up" to break resistance.

The time which drops take place in crypto is what is mind numbing. But outside that, this is regular activity in markets.

Posted Using LeoFinance Beta

Continuing with his thoughts on business Cohen remarked, “Playing it safe is no fun, it’s actually boring.

I totally agree with this point. Great rewards require great risks and venturing into the new horizons. Real safety is in doing research. I've been looking into https://www.cryptomiso.com rankings. They are super helpful when looking at which coins have real devs working and improving the tech. LTC is one of the worst cases of this:

I wrote more here: https://leofinance.io/@d-zero/cryptomiso-guthub-based-cryptocurrency-rankings Couldn't find stats comparison for Hive. I think our devs were using GitLab.

Posted Using LeoFinance Beta

Wow, from top 25 list, there are few that I have never heard of them as such. Look like Dev work and market buzz don't go hand to hand.

Posted Using LeoFinance Beta

That's very important lesson right there. I was super surprised to see which cypto came on top. I was expecting some of them. Others I had barely heard about.

Posted Using LeoFinance Beta

LTC is a real disappointment. I was a big Charlie Lee fan but the development on there seemed to die off quickly. He was supposedly working on an onchain vault plus doing some privacy features.

Nothing happened after that from what I heard.

Posted Using LeoFinance Beta

Charlie Lee sold off all of his LTC long time ago in the bull market. There's no incentive for him or anyone else to seriously take development. There's no DAO funding. It's all voluntary work. We have other coins where devs are seriously working on. We won't even feel LTC is gone :)

Posted Using LeoFinance Beta

How I would have loved to read your blog three days ago! I'm new to this game and, of course, I burned my fingers a little. The culmination is that I'm not sorry, I'm glad I learned and I'm waiting to see what the future holds.
Very logical everything you say and now I see things more clearly ... and yet, I knew that greed does not bring anything good!

Posted Using LeoFinance Beta

Three days ago was the same message.

This pullback does not alter those projects I believe in. It is just the market being the market.

Traders might have done well but holders are fine. I still believe Bitcoin, as an example, will bust through the all time high. It will not have too much of a pullback I dont believe.

This is not a reversal to me. As I mentioned elsewhere, I will be adding to a position tomorrow.

Posted Using LeoFinance Beta

I don't know why but I think just like you. I don't know why because I don't have the arguments but I have the feeling that everything will balance soon. Thanks for the reply, I try to understand how things are going, both from posts and comments.

Posted Using LeoFinance Beta

Sometimes just sensing where things are going is enough to tell the direction of things and instill confidence. There are a lot of signs on the broader scale that tell us clearly. Sure it is hard in a small, narrow window but with the big picture, it is easier.

The trend for Bitcoin, and some other projects, is set. It is becoming clearer with each passing month.

Posted Using LeoFinance Beta

I did not understand the confidence that Bitcoin will be something so important in the world. I thought this was actually the desire of the owners and self-confidence that they had made the right choice.
Lately, it seems to be going in a direction that is not necessarily related to someone's planning but more like an artificial intelligence. Does that sound scary ... or have I seen too many movies?

Posted Using LeoFinance Beta

"everyone" was waiting for this, now only thing is are they waiting to go down a bit more or not. hope it will stay this way till tomorrow, and when i buy tomorrow it will dip for a 1000 more. that is just how market works for me :D

Cant argue with that logic.

If it is a long term hold, the recent pullback is a steal. Of course, it might be lower by the end of the weekend.

There are no crystal balls.

If it is still down tomorrow, I will add a bit more.

Posted Using LeoFinance Beta

the combination of my relationship with banks and cards, place where i live and my biorhythm thinking he is in the wrong time zone makes buying a bit of a annoying thing. I need to wake up early tomorrow so i think i will invest a bit :D

Very good call.

Steep run ups tend to lead to temporary pullbacks or sideways trading.

We will see how it turns out but I believe in the long term path of Bitcoin.

Posted Using LeoFinance Beta

yes, a bounce back to 12-14k is possible, after that in about December/January we should be going north quite fast again

If those are the levels reached, then we will see a whole lot of filling of bags.

I am not sure we pull back that far but you could be right. Often the push down is more than expected.

Posted Using LeoFinance Beta

Your current Rank (19) in the battle Arena of Holybread has granted you an Upvote of 16%

pixresteemer_incognito_angel_mini.png
Bang, I did it again... I just rehived your post!
Week 33 of my contest just started...you can now check the winners of the previous week!
10

Yep, good advice. We've seen dips like this before in previous bull markets and prices eventually powered higher anyways. However, if these rumors turn out to be true it may fundamentally change bitcoin and crypto in the United States. Here's to hoping they aren't and if they are there is enough push back to ensure they never actually see the light of day.

Great advice! However, my comment may be a bit off the topic. I just felt that people are staring too often on the market price and leaving the joy and fun about Hive in a black hole. Social power is almost always stronger than financial power in terms of the long-term growth of a social platform. Shall we put more efforts in making the platform socially enjoyable? Like what PeakD has done.

BTC and crypto are always known for its volatility.
just wondering who is going to write now "Bitcoin is Dead"

Posted Using LeoFinance Beta