Steemit Crypto Academy | Season 3 | Week 5 - Homework Post For Professor @allbert
Hello, professor @allbert, I am pleased to be part of your lecture about Psychology and the Market Cycle. I hereby present to your my homework post for the assignment you provided to the steemians.
Explain in your own what FOMO is, wherein the cycle it occurs, and why. (crypto chart screenshot explanation needed)
The term FOMO comes from the feeling whereby when other traders are making money from the financial markets that you also want to make as much as possible prompting you to get into the trade so as not to miss out on any opportunity. FOMO generally stands for Fear Of Missing Out which most of the time makes traders make one of the worst mistakes while executing a trade because trading requires patience and reasoning.
Every trader at one point or another will experience the event of seeing an asset that he or she wanted to buy at a lower price, move higher and higher without him or her getting involved in the market. Witnessing this is incredibly painful, and the outcome of this is finally entering the trade near the highest point of the move and then pulling back and stopping the trader out of their position. This is a cycle that doesn’t stop, and it almost feels like the markets ought to get the trader specifically. FOMO not only impacts a trader's short-term action, but it affirms their response by creating a long-term tendency. The most common fear of missing out scenarios are information overload, social media, poor risk management, impatience, and lack of rules.
Bitcoin chart showing FOMO happening at the end of the markets' bullish trend.
Most traders use one rule that is never to buy an asset more than 2% past its pivot point. If you want to buy an asset at its proper pivot point, and when you move more than 2% past that, it is considered chasing. In case you have got to know your risk for that trade and your stops from the pivot area are 4%, and when you now chase past that 2%, you’re escalating plenty of extra risk to your trade. If an asset’s price moves than 2% past your pivot point, the best thing to do is setting an alert so that when it comes back from people that were in the move earlier taking profits and then once it comes in the 2% from its pivot point, you can buy a position or if it doesn’t come back you just move on to the next trade because there are endless opportunities in the financial markets.
Explain in your own words what FUD is, wherein the cycle it occurs, and why. (crypto chart screenshot explanations needed)
FUD is an acronym that represents Fear Uncertainty, and Doubt. FUD is particularly a game plan to influence insight by spreading incorrect news and conception of the appeal to fear. In most cases, this false news is done on purpose and people create fake information so that the whales can get in and buy the particular assets cheaper. These kinds of fake news generated in the crypto space put doubts in the people’s minds, that is, it is particularly a natural part of investing in cryptocurrency because it is deliberately steered up by different people to make huge gains.
Bitcoin chart showing panic sell due to FUD.
Most of the people in the cryptocurrency space don’t even know how to trade and because of the panic brought about FUD, the cryptocurrency market can more in a downtrend so much faster than even the stock markets and very few people will want to buy in when the crypto market is insanely going in the dip since they are not certain when it will stop dipping. Investors should know when the fake information is coming in and fact check to avoid panic selling which in the long run will lead to massive losses.
Choose two crypto asset and through screenshots explain in which emotional phase of the cycle it is and why. Must be different phases.
In this task, I decided to choose Bitcoin (BTC) and Ripple (XRP) as the crypto assets I will be talking about.
Bitcoin.
Everybody should account Bitcoin as more bullish than bearish in the long term. Studying this chart should acknowledge people in the crypto space that we are still in the same range that has lasted for about 65 days after a sharp decline which was due to FUD and the big whales taking profits which ended up creating huge losses to the small investors. With the fake breakouts at the top, we ended up crashing a 65% drawdown from the top to the bottom and locally there is a gap of indicators that play a crucial role to show the market trends. We had the volume supply cluster coming from the sell-off from the all-time high towards $30K drop and we had $53K, $58K supply with very thick bricklayer of resistances and currently, Bitcoin price is kind of like just jumping from one level to another and if we manage to successfully reclaim the highs after breaking the strong resistances then we can see Bitcoin high than the previous all-time high.
Bitcoin chart.
Ripple.
In 2021, Ripple has been on a seesaw ride beginning the year at 22 cents and rose to over $2 by mid-April, lingering around 62 cents on July 24. Despite the current downtrend in the cryptocurrency industry Ripple is up over 180% so far this year. So far XRP is performing relatively well the fact it has got a massive low case and all the news going on around about the coin yet it is still bullish. It has been moving on in waveforms and falling back to key level support due to FUD and holding up relatively well for the uptrend direction.
Ripple Chart.
Based on the analysis done in question 3, and the principles learned in class, make the purchase of 1 cryptocurrency in the market cycle. The minimum amount of 5 USD (mandatory), add screenshots of the operation and the validated account.
For this task basing on the analysis I made in question 3, I decided to buy some Bitcoin since it is in its resistance level before it pushes back to the uptrend but first before I take you to the step of how I made my purchase I will show you a screenshot of my Binance verified account below where I purchased the coins from.
In conclusion.
There are always rules changing in the crypto world and all you’re as a player is go by what rules are currently there but in the same case, you can create your own rules to make cryptocurrency work for you the fact that it’s so new, volatile and people globally are still trying to figure things out so if you understand how to play the game properly, you will get the best results in the long run. Therefore I would like to thank professor @allbert for this awesome lecture which has improved my understanding of psychology and the market cycle in the crypto space.
Hello, @brayan256 Thank you for participating in Steemit Crypto Academy season 3 week 5.
You have been curated by @yohan2on, a country representative (Uganda). We are curating using the steemcurator04 curator account to support steemians in Africa.
Keep creating good content on Steemit.
Always follow @ steemitblog for updates on steemit