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Crypto Trading 101: Understanding the Market Psychology 加密货币交易101:市场心理学

How will investors’ fear or optimism affect the financial market? 投资者的恐惧或乐观如何影响金融市场?

Back in the days, fundamental analysis was the most used analytical method to market performance. Fundamental analysis is a method of evaluating an asset by researching on related economic, financial and other factors.

Financial strength, profitability, competition, macroeconomic factors and industry conditions are used to determine its value and whether it is overvalued or undervalued. Value investing is an investment strategy most commonly associated with fundamental analysis.

However over the years with the technological advancement and growth within the finance industry, fundamental analysis became less relevant. The rapid pace of technological advancement in the trading sector is slowly replacing the tradition of ‘buy low and sell high’. Investors are starting to abandon intensive analysis and develop an understanding of a company or its business. Numbers and statistics of a company are important but in the financial market, human sentiment can cause a huge difference that numbers can’t solve.

Market psychology is the idea that the market movement reflects the emotional state of its investors. Market psychology is an important factor under behavioural economics that investigates the various factors that precede economic decisions.

With money and human interaction involved, emotions are the main driving force behind the financial markets price movement resulting in investor sentiment that creates the psychological market cycles.

Investor sentiment is determined by the emotions and reactions investors have when the price of an asset moves in the market. Positive sentiment is known as a bullish trend and negative sentiment is called a bear market.

MARKET UPTREND
When there is a market uptrend, investors are likely to adopt an improving attitude and increasing confidence, causing demand to increase and supply to decrease. The optimism, strong belief and possibly greed will lead to a strong buying activity. However, there can cause a market bubble to form when investors became irrational, overvaluing the actual value and buying an asset in the hope that the price will increase further. As the price gets overextended to the upside, it reaches the point of maximum financial risk.

MARKET DOWNTREND
In a market downtrend, it is likely to create a negative sentiment that reduces demand and increases the available market supply, quickly turn into complacency, as many investors will be in denial when the uptrend has reversed. It often includes feelings of anxiety, denial, and panic, and investors will reach the denial stage, insisting on holding on to their current position and hope that it will recover soon. As the prices dip further, the selling pressure grows stronger, often leading to a market capitulation. Eventually, the downtrend stops as the volatility decreases and the market stabilizes.

Best Practice

Understanding market psychology may help an investor to more favourable enter and exit positions. Highest financial opportunity for a buyer usually comes when most people are having negative thoughts, and the market action is low. Vice versa, the highest financial risk often arises when the majority of the market participants are feeling optimistic and confident.

There, investors would use market sentiment to buy low when there is panic and sell high when there is greed. In practice, there are easier said than done.

Many investors use technical analysis to attempt to anticipate where the market direction.

Technical Analysis indicators are tools that may be used when trying to measure the psychological state of the market. Investors can use the Relative Strength Index (RSI) indicator to predict when an asset is overbought due to strong positive market sentiment. MACD can also be used to spot the different psychological stages of a market cycle, spotting the relation between its lines and determine when market momentum is changing.

Closing thoughts

Most traders and investors agree that market psychology is a stronger driver of market prices than market fundamentals such as profits and economic performance. Every time when the market reached extreme optimism or pessimism, it will turn in the opposite direction. Although the psychological market cycles are well known, they are not always easy to deal with. Even skilled traders have struggled to separate their own emotions from the overall market sentiment. Investors face the difficult task of understanding not only the market’s psychology but also their own psychology and how that is affecting their decision-making process.

***Disclaimer: This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to risk.

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Quick guide:

过去,基本面分析是衡量市场表现的最常用的分析方法。基本面分析是一种通过研究相关的经济,金融和其他因素来评估资产的方法。

财务实力,盈利能力,竞争,宏观经济因素和行业状况可用于确定其价值以及其被高估还是低估。价值投资是最常与基本分析相关联的投资策略。

然而,随着金融业技术的进步和增长,多年来,基本面分析变得不那么重要了。贸易领域技术进步的迅速步伐正在逐渐取代“低买高卖”的传统。投资者开始放弃深入的分析,而对公司或其业务有所了解。公司的数字和统计数据很重要,但是在金融市场中,人的情感可能会导致数字无法解决的巨大差异。

市场心理是这样一种观念,即市场运动反映了投资者的情绪状态。市场心理学是行为经济学中研究经济决策之前的各种因素的重要因素。

在涉及金钱和人际互动的情况下,情绪是导致金融市场价格变动的主要驱动力,从而导致形成市场心理周期的投资者情绪。

投资者的情绪由资产价格在市场中波动时的情绪和反应决定。积极的情绪被称为牛市趋势,消极的情绪被称为熊市。

市场上升

当市场出现上升趋势时,投资者可能会采取改善态度并增强信心,从而导致需求增加而供给减少。乐观,坚定的信念和可能的贪婪将导致强烈的购买活动。但是,当投资者变得不理性时,可能会导致市场泡沫形成,高估实际价值并购买资产,以期价格会进一步上涨。随着价格过度上涨,价格达到最大的财务风险。

市场下降趋势

在市场下跌趋势中,很可能会产生负面情绪,从而减少需求并增加可用的市场供应,迅速转变为自满情绪,因为当上升趋势逆转时,许多投资者将拒绝接受。它通常包括焦虑,否认和恐慌的感觉,投资者将进入否认阶段,坚持坚持目前的立场,并希望这种情况很快会恢复。随着价格进一步下跌,销售压力越来越大,通常会导致市场投降。最终,随着波动性下降和市场稳定,下降趋势停止。

最佳实践

了解市场心理可能有助于投资者获得更有利的进场和退出头寸。当大多数人持消极想法,而市场行为低迷时,通常会给买家带来最大的财务机会。反之亦然,当大多数市场参与者感到乐观和自信时,往往会出现最高的财务风险。

在那里,投资者会在恐慌时利用市场情绪低位买入,而在贪婪时则利用高价卖出。实际上,说起来容易做起来难。

许多投资者使用技术分析来尝试预测市场方向。技术分析指标是尝试衡量市场心理状态时可以使用的工具。投资者可以使用相对强弱指数指标来预测由于积极的市场情绪而导致资产超买的时间。 移动平均收敛还可以用来发现市场周期的不同心理阶段,发现其线之间的关系并确定市场动能何时改变。

总结思想

大多数交易者和投资者都认为,投资者心理比市场基本面(例如利润和经济表现)更能推动市场价格上涨。每当市场达到极端乐观或悲观时,它就会朝相反的方向发展。尽管心理市场周期众所周知,但它们并不总是容易应对。甚至熟练的交易员都在努力将自己的情绪与整体市场情绪区分开。投资者面临着艰巨的任务,即不仅要了解市场心理,还要了解他们自己的心理以及这如何影响他们的决策过程。

***此内容不是财务建议,不应作为任何财务投资决策的基础,也不应被视为购买或出售任何商品或产品的建议。交易加密货币很复杂,并且有很高的赔钱风险。您应该仔细考虑交易加密货币是否适合您,并花点时间学习交易的工作方式并确定您准备冒多少风险。

关于嘉库

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嘉库成立是为了推动加密货币被广泛采用。融合了交易所生态系统的最佳功能和社交网络平台的原理,该交易所旨在通过赋予交易员权力和能力,将权力重新交到社区手中。

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