Investor and writer Karl Richards came up with the definition of a “behavior gap” - when the income of an investor is much lower than the profitability of the investment itself. It is during the behavioral gap when a trader makes a radically wrong decision. They make mistakes under the influence of two strong emotions: fear and greed.
Traders buy coins at a high price because they hope for greater growth - greed. Sell at a low because they are afraid of a greater fall - fear. And it can continue until there is no money left on the deposit.
To prove that he tells about one story with his friends. The price of their shares on the stock exchange rose sharply by several positions, and they turned to Karl for advice. They wanted to buy more shares, but he dissuaded them. A few days later the stock fell sharply, and they called him again - and again he asked not to do anything. And stocks rose again.
But for Karl investors would have bought shares at a high price and sold at too low before the new increase. The best decision during such price spikes is to do nothing.
Way out?
Karl Richards offers two solutions: choose a strategy based on emotions (fear or greed) or study the market carefully before trading. Many mistakes happen just due to the lack of objective information. Traders are arrogant - they trust their inner instincts and coincidences. But in trading this approach does not work.
Understand which emotion dominates your decisions and allow the opposite one to control you. It is worth becoming a conservative and narrow the analysis tools in trading. You may miss some winning transaction but you will be aware of all the risks.
Karl also suggests constantly have an inner dialogue with yourself. Ask yourself what will happen if you hold the coins and find yourself right or false. If you hold, you earn a little more, if you make a mistake, you lose everything. This way you can precisely assess the risk.
In Cryptorobotics terminal you can connect a Pro-account with a signal channel - this way you can set more smart orders and get more profit with the help of precise signals.
Good luck!