- Everyone in crypto likes to think they are a trader, but only a smaller percentage are any good
- Most people are better off either hodling or sitting out until a direction is confirmed
- Fighting FOMO and waiting for a confirmed move is the best way for amateurs to be profitable
The cryptocurrency world is divided into two types of trader – those who think they are, and those who know they’re not. Those who know they’re not good traders have come to this realization after being stung multiple times, at which point they realize it’s not for them and they should look at other methods of cryptocurrency investing. Those who think they have the potential to be good traders will continue to trade until they either make it or, more than likely, fall into the latter camp just described. For those who realize that trading isn’t their forte, finding the right time to enter and exit markets becomes hard to call, leading to bad calls and falling victim to that most destructive of all phenomena – FOMO.
Capture the Meat and Avoid to FOMO
When you realize that you’re not the kind of person that has the wherewithal to buy when others are fearful and sell when others are euphoric, the way to succeed is to focus on capturing the meat of a move. This will mean missing out on small percentages of gains at the very start and very end of a move, but you will be trading with less risk of failure.
Take the following scenario with Bitcoin:
It’s clear that the $46,000 region is a critical area for Bitcoin in terms of upward movement, which is only 15% up from where it is currently positioned. A trader might see that 15% move and look for ways in which they can make the most of it, potentially by longing and shorting on the way up, but this is encouraging greater risk and is not something that the majority of people should be doing, certainly not amateur traders.
For the average person looking to capitalize on an upward move, they should be looking for one thing only right now:
This flipping of the $46,000 region from resistance into support will act as the starter pistol for a new rally, with all on-chain metrics suggesting that Bitcoin is getting ready for its next big move, more than likely upwards as the cycle continues.
When we consider that the next proper rally will likely see Bitcoin get past six figures, losing out on 15% is nothing, especially when sacrificing this will allow you much more chance of profiting from the next rally. If you buy into the FOMO of an upwards move before Bitcoin has cleared $46,000, will you sell or hold at $46,000, not knowing how it will react? This is the kind of decision traders have to make on a daily basis, decisions that amateurs are ill-equipped to make in most cases.
Admitting Your Shortcomings Can Work in Your Favor
In the current scenario, acknowledging that you are not a trader actually works in your favor. Day traders will be scrapping over the 10-15% moves, which they will try to increase with leverage, with statistics telling us that less than 10% will be profitable. While Bitcoin is still in this range there is the possibility that it could break down to the $38,000 region, or lower, at which point amateur traders will be panicking and possibly selling at a loss.
Most cryptocurrency investors who aren’t simply holding for the long term are far better off fighting the FOMO and being willing to sacrifice smaller moves for the sake of capturing the meat of a bigger move. They should limit themselves to identifying what areas need to be cleared and held for further upwards moves and only buying in when those targets are met.