December 25, 2024

How To Deal With FOMO And FUD In Crypto Trading?

Aaron Mendoza January 31, 2022
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Whether you like it or not, emotions play an important part in a trader’s everyday life. Cryptocurrency trading, which should ideally be driven your technical analysis and strategy, more often than not, gets clouded emotions. Just like in traditional markets, crypto traders have always been warned to do away with emotions when making an investment choice. However, emotions can intervene – when you are buying, selling, building your strategy, or even during trade execution. They can do severe damage.

These emotions, while crypto trading, is governed FOMO and FUD. The primary emotion in this is ‘fear’. Almost all cryptocurrency traders must have felt it. At some point, you might have been riddled with questions like – Should I invest in Bitcoin? Is it the right time? Will I get the right Bitcoin price? What if it does not take up? Should I consider other cryptocurrencies?

The main reason can be the vagueness of the industry. But one thing is for sure, in cryptocurrency trading, you cannot be guided either FUD or FOMO. They will be your worst enemies unless you learn to master them. Find out how.

FOMO is fear of missing out. The fear of losing an opportunity that could make our life better. In simple words, it means the fear of missing a profitable investment avenue that could have borne fruitful returns. It is the fear that deciding not to contribute is the wrong choice and the fear that you will lose profits while others are reaping benefits. FOMO can make you choose a cryptocurrency exchange in India that others seem to be profiting from, or it can make you buy Bitcoins or tokens that are already on a high. It can also make you buy at the top of the Bitcoin price or hold on during falling prices after making a profit. FOMO can make you lose some or all of your profits. It is not easy to control these emotions. Nevertheless, you can still be aware of it so that you can act accordingly should these situations arise.

FUD is the spread of “fear, uncertainty, and doubt”. Media and social media play a major role in this. FUD can cause the price of a cryptocurrency to fall, not based on facts or graphs, but because of bad news circling on social media. Bad news is often, actually, groundless. It would be best to buy Bitcoin right after a 20%, 30%, or even a 40% drop. However, FUD will make you think it is dangerous, and you end up doing the opposite rather than buying Bitcoin.

The simple rule is not to fight them and learn to deal with them instead. You can learn to not get carried away with your emotions, and there are many ways that can be of help, like:

  • Keeping a trading log. If your trading log looks good, stick to your strategy and take emotion out of it.
  • ii.  Inculcate the habit of regular self-analysis.
  • iii. Keep your emotions in check before taking a position.
  • iv. Notice FUD early and act accordingly. If you think the price of a coin will drop ridiculously, set your stops and be ready to buy back in on the dip.
  • v. Set clear goals, diversify, and only trade within your means.
  • vi. There is no quick fix. It will take research, time, and motivation.
  • vii. Most importantly, never make a trade based on your fear.

Cryptocurrency trading is a rollercoaster ride, and FOMO and FUD are an unavoidable part of it. However, it is important to learn to nip these emotions in the bud, as they lead to errors. The only solution available is to pay heed and learn about these concepts so that you can evade them. And if you are looking for a reliable and transparent cryptocurrency exchange in India to give you the right information to begin your crypto journey, start trading on ZebPay.