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Chapter 25: Positive and Negative Investment Behaviors in Cryptocurrency

Handling your emotions well is good general life advice, but this skill can be even more crucial when it comes to crypto investment. Learn how to separate your actions from your emotions and achieve a more rational approach to investing.

Purchasing cryptocurrencies can be risky and complex, mainly if the investors have limited knowledge of how crypto trading works. And truthfully, some crypto investors end up making some preventable errors. If you are planning to invest in the best cryptocurrencies, you must understand that success requires some precision and insights, not just luck.

Negative behaviors

  • Falling for the hype without doing research

You are familiar with words like cryptocurrency, Bitcoin, NFT, and the Metaverse, right? Well, they have become household names to older, millennial, and younger generations.

Everyone on social media is hyping these futuristic concepts and products to encourage people to invest. Does that mean you should immediately jump on board? No. Do your research on these digital currencies and how trading works to ensure that you know what you are doing and where you are committing your funds. A good starting point is our Crypto Fundamentals series.

  • Investing without a strategy

Unsuccessful investors usually enter the crypto markets without a strategy. They have no idea when to sell at a profit or how much risk they are willing to take. For instance, due to market volatility, a digital currency’s price can be up one minute and down the next. Thus, a substantial profit from any trader can turn into a loss in just one or two bad trades conducted without proper strategies. Set your crypto trading strategies by planning the amount you intend to invest, determining profitable prices you are willing to sell, calculating expected returns, and adjusting the strategy whenever deemed appropriate. For more information regarding investment strategies, our Smartvestments series can come in handy.

  • Emotional Investing

Emotional investing refers to a common behavioral mistake many crypto investors make when they make rash decisions based on emotions rather than facts.

For example, Bitcoin is very volatile, and its prices go up and down a lot. In this case, do not panic and sell your Bitcoin once you notice a slight dip since it might correct itself in a few days and become more profitable. It is recommendable to read the cryptocurrency charts to understand how the trading market works.

Positive behaviors

However, some positive behaviors employed by successful crypto traders help sustain profitability. Good investment behaviors are critical in becoming successful in the crypto market in the long run. Let us explore some of those behaviors;

  • Diversifying your crypto portfolio

A cryptocurrency portfolio is a technique used to manage the inventory of your online currency investments. It helps track the performance of each coin, thus facilitating good decision-making.

This positive investment behavior is based on the saying, “don’t put all your eggs in one basket”. A diversified crypto portfolio helps to capitalize on the growth of cryptocurrencies while considering their inherent volatility and associated risks. Such a strategy provides stability and ensures that you can use price declines to sustain profitability.

  • Conducting a primary research

One of the most critical behaviors in crypto trading is conducting research. You need to know about the crypto assets you intend to invest in and understand how trading works to ensure you reap the benefits and massive gains in the crypto markets. Besides, the research helps you ensure that you are up-to-date with the trends and patterns in the crypto industry.

  • Know how to handle your emotions

Emotional factors, most notably, the fear of missing out (FOMO), significantly influence how investors manage risks. FOMO in crypto trading refers to the fear of missing out on a profitable trade. For example, an investor might be tempted to buy into an upward trend when the price of Bitcoin goes up, forgetting that the value might decrease within a short time leading to higher losses. It is essential for a trader not to be led by emotion and to follow their trading strategy.

Mastering the cryptocurrency world takes a while; instead of pressuring yourself take time to learn and practice. Register on IXFI today for a seamless trading experience and more information and tips on crypto investments. Your Friendly Crypto Exchange is by your side.

Disclaimer: The content of this article is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial and fiscal circumstances.

Although the material contained in this article was prepared based on information from public and private sources that IXFI believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and IXFI expressly disclaims any liability for the accuracy and completeness of the information contained in this article.

Investment involves risk; any ideas or strategies discussed herein should therefore not be undertaken by any individual without prior consultation with a financial professional for the purpose of assessing whether the ideas or strategies that are discussed are suitable to you based on your own personal financial and fiscal objectives, needs and risk tolerance. IXFI expressly disclaims any liability or loss incurred by any person who acts on the information, ideas or strategies discussed herein.

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