The most successful and resilient investors were not made in a day. Familiarizing yourself with the ins and outs of the financial world and understanding your personality as an investor takes time and requires patience.
Sure thing, there is no competition in investing because what works for one person may not work for the other. Cryptocurrency trading appears to be one of the rapidly growing markets in the world, with hundreds of thousands of people signing up on exchange platforms each month.
The current global population of cryptocurrency sellers and buyers is estimated to be over 106 million. As pro and novice investors join the cryptocurrency world, the question is what makes some investors stand out in a market characterized by high volatility, uncertainties, and lack of profit statement margins that can be used to estimate future dividend returns.
The bottom line is some investors are successful not because they had so much money, to begin with, but because they adopted the right investment mentality.
A Good Mindset is Your Best Friend
Knowledge, experience, and skills are fundamental factors in ensuring successful investment. Nevertheless, these aspects do not always lead to success in the absence of good trading psychology.
Trading psychology refers to a person’s mental state and emotions that dictate an investment’s success or failure. In other words, trading psychology points out an individual’s character and behavior that influence their trading actions.
Fear & Greed
Let’s think about fear and greed. Fear and greed are two emotions that successful investors understand and control. Fear is a natural reaction to an imminent threat. Fear is an emotion that threatens profit potential as it convinces investors and traders to close positions prematurely.
For example, crypto investors may get scared upon learning of the declining market of their leading coins. Such news may cause some investors to overreact and decide to liquidate their assets and refrain from taking any risks. While they may avoid certain losses, they also miss out on some gains.
Successful investors quantify the fear by considering what they are afraid of and why. They often do this before an undesirable event strikes. Thinking about fear ahead of time helps investors understand how to perceive the vents instinctively and react to them and even move past the emotional response.
On the other hand, greed (an excessive desire for wealth) eclipses rationality and judgment. Greed can lead investors to engage in suboptimal behaviors such as making uninformed high-risk trades, transacting with unscrupulous companies or platforms just because the price is going up rapidly, or buying assets without conducting due diligence.
Successful investors quickly detect greedy instincts and respond swiftly to contain them by developing a trading plan grounded on rational thinking, not whims.
Discipline and Risk-Taking
These two are critical aspects of trading psychology since their implementation is crucial to the success of an investor’s trading plan. Discipline helps investors stick to their trading plans; hence they know when to book profits and losses.
Successful investors put themselves on the line by taking risks. These investors stay put when everyone else is quitting due to market volatility and strict government regulation. A risk-taker creates new opportunities for the future and ultimately achieves what they initially set out to do.
The Mental Landscape of a Successful Investor
A successful investor understands how to start investing. They know that investment is a journey and not a one-time event. The journey begins with defining the destination (goals) and planning the investment itself.
Such investors have in mind that risks and benefits are inevitable. However, they evaluate the risks and benefits, how much they are investing and the likely returns, the ability to deal with risks and pressure, and how best to diversify their investment portfolios.
Optimism is the Most Reasonable Stance
Unfortunately, a good number of investors join the cryptocurrency ecosystem so full of pessimism. Any investment calls for optimism. Even when circumstances are too overwhelming to drown investors in pessimism, they have a chance to move, get out, run, sell, and hide because they cling to optimism. Optimism is a call to stay the course and enjoy every ride. Optimism is not simply believing that something will be great but the belief that the odds of a good outcome will be in your favor over time, even when the journey is characterized by setbacks.
At IXFI, we understand optimism — we’re optimistic about the future of crypto. That’s why we’ve committed ourselves to creating a suitable platform for all investors, from beginners to pros. Register on Your Friendly Crypto Exchange to try it out for yourself.
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.
