We are now at the point where most people in the developed world are familiar with the word “Bitcoin”. With the increase in awareness of Bitcoin and cryptocurrencies, so has the investment in this space.
Cryptocurrency trading has taken the world by storm and with it many people are jumping in en masse in an attempt to profit from the incredible returns these types of investments offer.
However, to survive and thrive in this space requires a special set of skills to be learned and mastered — that is, Mastering the Psychological Element of Cryptocurrency Trading.
It’s 100% Psychological
It’s said that over 90% of Bitcoin trades are purely speculative. Although this may be a gross underestimate, it’s quite certain the percentage of speculative trades for altcoins (all cryptocurrencies other than Bitcoin) is even much higher.
What this means is price volatility can be largely determined by the manipulation of our basic human emotions — This is especially true for the new blood entering this space.
Terms like FOMO (Fear Of Missing Out) and FUD (Fear, Uncertainty and Doubt) circulate in all corners of this online world.
To be able to succeed in cryptocurrency, you will need to be able to control the psychological elements of this game.
It’s the Art of War
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but >not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you >will succumb in every battle. — Sun Tzu, The Art of War
Before even making the decision to trade, there are many forces at play directed at you to sway your judgement and form an opinion. Consider them your enemy if you will — their intent is to capture your attention and if lucky, sway your judgement to their benefit.
There are altruistic players in this game looking to develop greater equality for the public at large with their open source and community based platforms.
There are also unmerciful players in this game looking to line their own (online) wallets, such as Pump and Dump groups that feed off greed and the chance to make a quick buck, or trolls (often paid reps) offering their unsolicited opinion on whats hot and the next big thing.
Regardless, whether the forces at play are with you or against you, they are there to accomplish one thing — redirect your attention and reform your opinion.
How to Win The Game
Firstly, it’s important to think of this as a game. Investing in cryptocurrency for all intensive purposes is completely virtual. It’s intangible. It’s nothing more than a publicly agreed-upon register of values.
Furthermore, many of the projects, especially ICO’s are nothing more than an idea and intention to make the concept a reality.
If we can agree cryptocurrency investing is a game, then it’s a strategy game.
It’s a strategy game that requires you to put the emotion of trading aside and to critically assess the information you have at your fingertips.
This process is called critical thinking and to win this game, you need to develop this skill.
It’s the Most Valuable Skill You Can Learn
Cryptocurrency trading offers you the opportunity to develop and hone your critical thinking skills — not only a highly valuable skill on it’s own, but critical to your ability to be successful in this realm.
Critical thinking is the ability to form a clear and rational opinion about what to do or believe. It’s the ability to engage in reflective and independent thought based on the information you have at hand.
Thinking critically allows you to:
-Determine the most probable future outcomes for a series of events
-Understand and identify patterns and logical connections between events
-Detect inconsistencies, abnormalities and mistakes in reasoning
-Use creatively, logic and a methodology to solve problems
-Critical thinking isn’t simply collecting data.
It’s about sorting and analyzing the information, looking for patterns, inconsistencies, connections between data points and the ability to predict a probable future outcome for a series of events.
Most importantly, critical thinking also gives you the superpower to push away irrational or otherwise emotionally motivated actions. It will help you steer clear of those basic human emotions that can have a negative influence on our judgement and long-term success in this realm.
Mastering the Game
There is an art and science to being successful in cryptocurrency trading. Sure there is an element of luck, but long-term success in this market is largely a result of mastering our own internal skills.
Mastering the psychological element of cryptocurrency trading is about improving your critical thinking skills. It’s about the ability to think clearly and rationally given any circumstance.
Regardless whether the market is up or down, it’s about having the nerves to see your plan through and not succumb to those more basic human emotions.
Equally important, critical thinking is necessary for self-reflection.
In order for us to live more meaningful lives, we need to have the ability to reflect and be aligned with our own values and beliefs (as well as our investment choices and decisions).
Critical thinking is a life tool; to be sharpened, honed and cared for by a master-craftsman (that would be you).
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