Most of us have all been in a similar situation at some point in our crypto trading ventures... The inevitable "I can beat the market," day trading mentality. That is, buying and selling the same asset many times throughout the day. This usually doesn't work out due to human nature which I will further explain.
If the price were to go up you would be more inclined to hold or buy because you see the asset has made you money and think the price may continue to go up. You are feeling great and having visions of grandeur but if you sell now, as the price continues to go up, then it leaves you feeling left behind or simply, you are experiencing FOMO (fear of missing out). This is why non-battle hardened traders will hold or not sell.
Likewise, if the price were to go down you will be more inclined to sell.
-This is especially true regarding to the crypto markets in general because there is no underlying revenue or profits to draw a baseline for price. Meaning the price of bitcoin could be worth $1 or $1 million and the blockchain would more or less not care. The only thing that seems to hold price at certain levels are supply and demand forces and market sentiment over long periods of time. Bob used to think $10 per bitcoin was too high back in 2011 and now in 2018 Alice thinks $10,000 is way to high...
The sinking feeling in your stomach as the price continues to drop off is anything but enjoyable. Human nature would tell us to abandon ship and give our mind and body some relief.
This is an overly simplified explanation but nonetheless, this basic human instinct can and is used against traders. More advanced traders using automated systems will exploit new traders very easily with a little bit of market control, essentially milking anyone trying to day trade against them. This clip hilariously portrays this type of situation!
Tips to avoid being like this guy.
-Never buy an asset which you do not fully believe in. Without your own support, resisting to sell during difficult times will be even harder and there will be many more difficult times ahead!
-You will get burnt eventually so if you are new start out slow and learn from your mistakes. Hopefully you will only pay a small tuition for your learning.
-Zoom out. The whole market is on a massive bull run. Don't get greedy. Don't overly trade. Don't panic sell.
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