Poisonous mindsets for a crypto trader

As much as it is hard to confess, In my years in crypto, I lost a huge amount of money. Most of my losses can be blamed on wrong mindsets I had at the time. I am writing this piece, hoping for less experienced traders/investors to avoid those mistakes.

1. Cherry picking:

All of us heard the story of that one guy who got rich by investing in a memecoin. But what about millions who have lost their life savings?

Our mind, usually picks the pieces of information which confirms to our wishes and believes. We hear what we like to be the truth. And we dismiss everything else. It is called cherry picking.

Everyone loves to believe we can be that one lucky individual, but we are not. For every crypto success story, there are tens of thousands like me who lost a fortune "gambling" on high risk memecoins.

1. Gambler's fallacy:

Some people mistakingly believe several unfavorable outcomes increase the chance of a favorable outcome to happen. This mindset is extremely dangerous as it encourages you to further engage in a failed investment.

Surely a coin which keeps going down will finally go up? Right? Wrong! In a highly randomized setting, the chance for a favorable outcome usually acts independently from previous outcomes. And this is the logic behind my next point:

1. The sunk cost fallacy:

Ever had a hand of poker when you bet 10000$ on a hand, only to realize you have no chance of winning? Many people then proceed to call small amount other player are betting. Why? They think adding 1000$ to their 10000$ bet is better than losing 10000$.

Guess what! They are gonna lose anyway. And they just lost another 1000$ on a losing hand.

It is never too late to stop your losses. It is never too late to back off. 1000$ is better than zero dollars. If your investment is sinking accept your loss and get out.

1. Greed:

You know what is nice to have? Profit! But first you need to take it! I saw people (including myself) hold on into an asset when it goes ballistic, Hoping for "more". Granted no one knows how high an asset can go. But what if it dives? People who owned BTC pre 2021 would have been better off selling it at the peak hype of 2021 and buying more when it asnk to nearly 15000$.

You can at least sell enough to cover your initial investment. As a wise man once said, hardest thing in crypto is to take profit.

1. Long plan for an unstable market:

You know what sucks? Knowing a coin gonna tank "and" having all of your bag locked away in a long staking plan.

Crypto is a minefield. Any coin, except maybe BTC, ETH and a few others can go bust in a blink of an eye. Always have an exit strategy. Never leave your coins unattended for a long time. You might come back, only to see them not worthing shit.

Hope it can help. If you have any insights, share them in comments.

Have a great day or night wherever you are.