Coin Watching
Most cryptocurrency traders and investors will at some point be tempted to succumb to the psychological pressure theyre exposed to while observing cryptocurrency markets. Knowing when to ‘sit tight’ and weather the storm of an outwardly bearish market can be one of the most difficult decisions a trader can face.
Hanging on to your coins can be a nerve-wracking experience; especially if you happen to invest early into an asset that subsequently declines significantly in value. It’s tough to make a decision during times of market volatility and the temptations to both sell low or buy high can be exceptionally strong.
Listening to the market
If you are new to cryptocurrency trading, it is important to learn to analyze the markets and make decisions based on your own analysis, instead of solely relying on the opinions of others. Many times, the opinions you hear from media, friends, and professionals are based on subjective feelings and might prove to have little to no evidentiary basis.
Therefore, before making a major decision regarding your cryptocurrency holdings, you should use multiple tools and techniques to try to assess the market sentiment. These tools should include technical or chart analysis - which can provide valuable insight into a coins near-term prospects - along with tools such as coin tracking, optics, and news scanning.
Reacting rationally
It is essential to consistently evaluate the priority of your objectives, whether they are short-term trades, mid-term investments, or long-term holdings. When evaluating short-term trading opportunities, it is essential to be mindful of current trends in the market which may be influencing prices, as well as asymmetric risks associated with the various trades.
For mid-term investments, you should evaluate the past, current, and forecasted performance of the cryptocurrency in question(s). Both technical analysis and fundamental analysis should be used to get a relevant perspective of the market environment.
Finally, for long-term holders you should remember to focus on the big picture. Steady declines in prices should not necessarily be viewed as catastrophic. In cryptocurrency markets, there can be long-term potential in select coins. It is important to emphasize the importance of having a grip on the cryptocurrency market by forming educated views and expressing high levels of conviction.
Making informed decisions
It may be frightening and difficult to hold coins at times; but it is important to keep in mind that analysis of the market and investments should never be an emotional decision. It is important to stay cool-headed by focusing on facts and making informed decisions, based on individual goals and objectives.
It is important to remember that the term ‘Fear and Greed’ drives a lot of decision making in the cryptocurrency world. Fear and Greed are difficult to ignore, but the key is to recognize when either of these emotions is influencing decision making. Understanding when it is the right time to hang onto coins and when it is the right time to take profits is one of the most challenging components of cryptocurrency trading.
Regardless, it is important to remember that the greed associated with buying low and selling high is always admirable, so long as it is done after exhaustive amounts of research. This is why coin watching is constantly encouraged, as market conditions and prices can change quickly and without warning.
