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Survival Guide on Dump times for Bitcoin and Cryptocurrencies
Traders Magazine Online News, November 26, 2018
When the market dumps, the same fate hit the sentiment of the people that are directly involved in it with open investments: all those emotions that are associated with a bull market and growth in general (excitement and confidence) gets crushed, leaving room to anger, disillusion and even depression.
In this context, looking for excuses is the worst behaviour that a trader can have, ending to make emotionally driven decisions instead of rational choices. Inexperienced traders especially tend to externalise the causes of their losses in an attempt not to hit their ego, ending to identify major events like SEC, futures market, Spoofy etc. as the main reasons behind the general wreckage of their unmanaged portfolio.
Inevitably, these arguments get traction on social media, going viral. Newbies are prone to get stricken by those kinds of statements: their lack of specific knowledge related to the financial markets, in fact, makes them particularly vulnerable, ending to develop pessimistic behaviours that inhibit every kind of learning effort, because -in their minds- it would be useless anyway in a “highly manipulated market."
The direct result is the prevalence of pessimism, declined conventionally in the following way: The trader has a pessimistic feeling; therefore, trading practice becomes emotionally driven; external reasons justify the losses, suppressing that kind of positive self-critique which puts the basis for refining trading and risk management practices; money gets lost, and anger rises.
While things in the market get worse, social media, as a direct result, becomes crowded with angry and noisy people. Coalitions arise, feeding each other moods in the attempt to preserve their egos: if the perceived reality is that some kind of external event has fooled everybody, then even if in practice your capital could have been protected with proper risk management, nobody will think about that, therefore you will not appear as “stupid”. That’s the norm after all.
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