This is a mistake that most gamblers investors make on a habitual basis. Never gamble with your rent money. Don't gamble with the money you need to buy food with. Bills don't pay themselves! This should be obvious for a multitude of reasons, but it's clearly easier said in theory than accomplished in practice.
At the end of the day being financially over-extended is an easy mistake to make. In crypto, this is the standard. We see projects left and right making triple digit percentage gains and we think: "Yeah but if I bet everything on this I'd make even more!"
Slippery slope, friend!
This is why DeFi farming is actually a nice chance of pace. Every DeFi farm has a nice pair to a stable coin. This makes it a much safer gamble. Half of the total value will always be measured in stable coin and we can cash that side out whenever we need to.
Impermanent loss is irrelevant
Why's that? Because let's be honest: there was no way in hell you were going to hold 50% of your assets in stable coins right from the start. You'd of just went all in like everyone else. That's the entire reason you got into this mess in the first place. Remember?
With yield farming, we're essentially FORCED to hold 50% of our assets in something else. A stable coin is the best choice if we are prone to becoming financially overextended.
The worst part of being financially overextended is the fact that we won't be able to pay our bills when shit hits the fan, right?
Wrong!
The worst thing about being overextended is having an extreme emotional attachment to the money. We NEED that money to perform! THIS HAS TO WORK! That is the mindset of someone on tilt, and tilt will get you wrecked real quick.
When you're on tilt you'll make foolish decisions constantly. You see another token rise in price and try to chase those gains, oops that coin just crashed you lost money. You'll refuse to take losses while thinking, "The price has to recover soon; it just has to!" It doesn't: the price crashed again, you lost money. Right when you do sell the market seems to have our number and will spike a day later. Every time these things happen they will make us more emotional and more prone to making stupid mistakes.
How do we fix this?
- We should always have a position in stable coins.
DeFi Farming makes this easy. - We should never gamble with more than we are comfortable with.
Light the money on fire in your mind.
You don't care about it.
This is all a fun game: even if we lose. - Be careful about winner's-tilt.
Some people are even more prone to stupid mistakes after they win. If you squander your winnings during a luck-streak you'll lose everything after your luck temporarily flips. - DCA DCA DCA
Always dollar cost average.
Stop making huge decisions and then moving all in.
There's no reason to leverage trade or increase risk here.
These are the most volatile markets in the world already.
A 5%-10% move in the stock market is huge.
A 30% move in crypto is standard (in both directions).
Conclusion
The emotional aspect of investing is a tough nut to crack. It's easy to get trapped in a dark headspace of our own design. However, the market doesn't care about our feelings. It is a wild untamed beast, and we may fall off during the ride. All we can do is pick ourselves back up and try again. Perhaps we play it safer the next time around. Or perhaps we learn nothing and double-down trying to recapture those losses. Who knows?
Statistics and probabilities are unmoved by past events. If you lose 5 times in a row there isn't suddenly a better chance to win on the 6th try. Each gamble is a totally independent event, and if you try and convince yourself you made a bad play when you actually just got unlucky, the next time you're faced with that decision you probably will make the other bad move instead of playing the odds correctly.
When it really comes down to it we don't need to bet the farm on crypto. This is abundance technology: except this time around the technology is money itself. There's going to be money everywhere. It's only a matter of time before we capture a nice chunk for ourselves, no matter how much collateral we put into the system to start. Better to play safe then sorry in crypto. Fact.
Posted Using LeoFinance Beta
As a relative newbie in the crypto world, I decided to follow a pattern: After each paycheck that I receive, I invest 10% of it in crypto per month, and I have 4 very stable coins (like you said) + 1 that is high risk/not stable. That way, I basically have 8% invested in a relative safe coin and 2% is in a high risk coin. I dont remember to have been this excited in math and in stocks, EVER! 😁
That's pretty awesome.
Sounds like you're doing better than 97% of the other peeps out there.
Haha thanks, I wouldn't put it that way but I am just glad to have started out with crypto - better late than never, right? :)
Thanks, and I do think you should have a plan going into a trade.
1.Know why you are buying(do your OWN DD)
2.Have a plan to get out of the trade. Do this before you put money on the line
Note: There will always be another good trade
3.Thou shalt not covet they neighbor's gains (I've seen a lot of people get sucked into Doge lately this way, and it may end badly for a lot of them).
For me, a huge thing is to set fixed budgets and the the money out of my sight. Its called parkinsons law.
I also always calculate on the bad side, meaning that you expect the worst. This means yoeu are happy if things work, but not upset if they dont.
This is what I told my uncle when he expressed concern about me trading crypto. I'd still feel sick to my stomach if it tanked and I lost out on whatever gains I've made so far, but my original stake is so small that I'm out almost nothing if it all goes to zero tomorrow. Set it up so there's only upside and you literally can't lose. One way to do this is what Jim Cramer calls playing with the house's money. When you get something that's a multi-bagger, like Doge for example, take just the original stake out and there's absolutely no chance you'll ever lose money on that trade. Everything is gains.
I am always exited when charts go down because that means I can go shopping cheap.
when shit hits the fan,cover me!
DCA is the shield
Absolutely. Learning to control the emotional rollercoaster is probably as or more important than learning about the markets!
The true stablecoin is paxgold. Inflation is even appearing in the CPI.
They rig the game and they manage to lose anyway.
I have an idea for a superior algorithmic stable-coin.
Hopefully it works out :D
That is great advice! The thing is I can put a limit on my gambling accounts but not on crypto! Need to be careful for sure
Posted using Dapplr
Sounds like you've been looking at the price of CUB lately :-P
I'm risking a lot on CUB but I'm still over x2 what I put in.
Same here...
I just seem to be continually breaking even... which is kind of amazing considering the price I originally bought CUB in at...
I've read quite a few posts lately from authors that could use these smart words.
Posted Using LeoFinance Beta
I should probably follow your advice on the stable coins but I really do feel like the bLEO/BNB pool feels the safest. So you would prefer the CUB/BUSD over the CUB/BNB pool for defi farming?
Posted Using LeoFinance Beta
BNB is hot right now I don't think we are in danger of crashing till late June.
what's special about june? Q2 event?
I think that it is still time to get good returns with BNB, the price of Cub has remained in a stable range -30% down in the last 14 days something normal in cryptos.
Thank you for talking about the psychological aspect of volatile investing. I remember the pumps of the previous bull cycle and me thinking that there MUST be fundamental technology I didn't know about to back this move. I didn't moon, I didn't get rekt, my holdings were neutral in retrospect.
The best way to make good decisions is to have a balanced life, focus on frienships and other things that add value to your life. It is a good way to remind yourself of what you are fighting for in the first place, putting up with an emotional roller coaster of wins and losses.
We are very lucky to have capital that can be put to risk in the first place, for others, any capital is rent money. Because lets face it, a small capital quickly gets eaten up by fees even on the BSC.
Posted Using LeoFinance Beta
There is a lot of wisdom here.
I've been trying to control my emotions and the urge to go big on stuff that I don't really know much about just because of those crazy APR numbers.
I've been playing it safe for now and I don't regret it. Sure, I might be missing out on some gains with stuff like Doge or other crazy projects, but at least I have my peace of mind and that's something that's hard to put a price on.
Posted Using LeoFinance Beta
It's bait. Guys in the know selling to each other, triggering FOMO then dumping on the poor saps who swallow the bait.
Yeah, that could be it indeed. Either way, a lot of people are gonna lose money there and I don't wanna be one of them.
Posted Using LeoFinance Beta
Yeah, but you won't get me out of my CUB-BNB pool :D
Posted Using LeoFinance Beta
same
Gambling is a game where we need to use our left over money which will not be of use to us and when such money gets lost, we may not be able to cry.
It happened to many people who were holding 1up thinking that it will boom the market. To me I thought it will increase in price not knowing that it going to be over.
Trading in crypto market comes with risks which we must all prepare for.
Gambling should be limited to what cannot make us lament.
Welldone for this great write up which will change the mindset of people towards gambling.
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Hi @edicted
You make many good points.
I often struggle with wanting to be in the Cub-BNB pool versus being in a cub-stable coin pool (BUSD), so for safety I stay in the stable coin pool. I think holding BNB is also a good longterm investment.
Posted Using LeoFinance Beta
Cub-BNB is fine if you aren't overextended. Preferred even at this point.
I love that word NEVER GAMBLE WITH YOUR RENT MONEY you are referring to me ...i always do so and loose all😥....this your post really change my mentality....I hope to see more of your Post am a NEWBIE on this chain..I love every single post am seeing @marvinix thanks for the impact
This is bang on the bunny and links to one of the first lessons that an investment guru should teach which is..
PAY YOURSELF FIRST
This simple means that you have the money to pay the bills and the necessities and then anything else, you can do what you want with it....as in your example, invest/gamble* (*delete based on personal belief) on the DeFi games.
Great advice and I trust you're having a great day :-)
Wut! I wrote about Gambling yesterday. I Enjoy Gambling, so much so
There is a reason 90% of "traders" lose money
right now algos run most markets
average people should refrain from "trading" and move to "investing/saving" mindset
never invest money you will need in next 6 months, never
dont rush, think, and stay safe
I agree
Honestly... sharing a budgeting app with my partner has been a great guard against all of this... I'm not sure how I would have gone if it was just me... possibly a lot richer but also totally maybe not. I know myself.
hello @edicted
this is a mistake that I make very often and the truth is that I have to control these investments, thanks for the information I didn't know that you could liquidate 50% of the investment.
publicity note:
I'm promoting That curation trail on HIVE and it would help me a lot if you forward it, You can also check it yourself: you might find it interesting to join, I'd love to hear your comments.