Crypto Academy Week 12 : Homework Post for @fendit || Don't Get Lost in the Fuzz|| Done by @chilaw

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A) Place yourself in the following situation:
You bought BTC a couple of days ago at a price of USDT 62K. Suddenly, you see that this situation is going on:

What would you have done before reading this class? What would you do now? Explain in detail if there's something you would do differently.

PRE-EXPERIENCE ACTION/REACTION

Though this is not the first time Bitcoin is having such a bearish trend. It was sometime seen that the price of Bitcoin went down and so many lost funds because they could not resist the crash rate at that time. But only a few could withstand and HODL and tarried until re-bounced which showed that bullish trend till now. So my fear would be "can I wait for a bounce back if I decide to HODL before it shows that bullish strength?", And what is the wait duration? Without the requisite experience I have now since the start of the crypto classes and @fendit lecture on this post, there is no gainsaying to wait and see my asset gradually disappear into the thin air just because somebody somewhere has said it will bounce back. I will be all out to make quick withdrawals to salvage my assets immediately.

POST-EXPERIENCE ACTION/REACTION

Since my participation in the cryptoacademy and presently from your class this week, my perception to make hasty decisions has drastically changed. First of all, I have learnt about risk level aversion, Stop loss tool, Market analyses (Technical/fundamental and sentimental analyses) etc. these are available trade instruments at my disposal. Basically, Bitcoin has remained the lead coin in the cryptocurrency market with presence in the Large Market Cap, so there's nothing much to be scared of given to its present bearish trend. Over time, it has always been seen to have more bullish strength in re-bounce each time it goes Bearish.

If I can have a buy-in at 62k, this significantly means that I am not a conservative risk taker, rather I should be at the moderate and aggressive aversion risk level. Therefore, I should be able to apply the use of the Stop-Loss to enable me avoid being in a state of hasty decision making and to also guide me so as not to over shoot my potent risk level. But if I am not using the STOP-LOSS, I will quickly check the market cap to know the direction of inflow or outflow of this coin so as to know why the bearish trend at the moment. This will help determine if users are selling off their coins or not, perhaps my multi dimensional decision. If there are mass outflow of sell-offs, that means the price will continue to dip which invariably means more losses if I don't exit the market immediately.

So summarizing my action, I will either apply a STOP-LOSS bearing in mind my risk-aversion percentage level or quickly do a market analysis of that coin to ascertain the extent of dips to be seen in order to guide my next action.

B.Share your own experience when it comes to making mistakes in trading:
What mistakes have you done when trading and what did you learn from them? If you have little experience when it comes to trading, tell if you got to know about someone else's experience.

I have a friend who once told me that she has found a quicker way to make money back then in 2013. This was the era of forest trading. She boldly told me that a friend was teaching and mentoring her through the process via online and also face-to-face mentorship. For sure, I saw her downloading and installing some weird software to her devices to be used for this trade and gboom!!! she invested 1million Naira then which was worth about $7,000. But this investments were done in batches, first second and third account funding. They started trading, I did not understand the whole process and cannot say for sure what tool they used and so on. All I knew was that the first thrash of investment done went south in less than 3weeks, which was valued at $2,500. In a quest to salvage the money lost, the second payment was made again which was valued at $2,500. Just as if it was not enough, there was now a combined team between her expert and her self which was required to salvage the situation and the last set of $2000 was invested and it still went south.

At this point in time, I learnt the Police got involved in settling this matter due to the losses incurred. But trust me, I was unaware to be a witness and I maintained same position all the period under review. In this case-study, I observed some anomalies which were the inexperience status of those involved which played out, Overtrading seen in too much market exposure and trade engagement, and also sentiments and emotions that got involved hence gave rise to revenge and greedy display to win back.

Feedbacks/Lessons from this Experience

Emotional involvement during trade should be well tamed as this has continually given routes to other forms avoidable mistakes during trade. When we are overwhelmed at any point, the best decision is to make an exit position from the trade and take a deep breathe.

The resultant effect of applying emotions during trade may bring about trading with REVENGE. The more we try to recover from the lost grounds, the more we loose more assets as a result of this. It may lead to complete loss of asset, therefore we should completely avoid trading with revenge.

I also picked another lesson from this experience. I observed that they were seriously engaged in OVER-TRADING. It is simple, when we do indulge in this act, we are basically exposed to market volatility and from all indices trade markets of such are also highly volatile with loss of asset immenient.

Lastly, we need to get the requisite experience before indulging and engaging the trade. This is very necessary that we should know how to apply all the market analyses and indicators so as to place us on better profit positions.

Which of the strategies discussed in the class you find the most useful for you? Why?

I see Overtrading and Revenge trading to have a common place and more knowledgeable to me. Overtrading may likely only not be associated to newbies who wants to take a major part in the trade by continuous engagement but also be attributed to the side effects of trading with emotions. When we continuously engage the trade as I earlier said, we are at risk to meet the most turbulent of market trends which invariably may lead to loss of assets. And when we loose these assets, we may be found in a cycle where we may tend to recover these assets, and every move made may lead to more dips and losses. In this case REVENGE is already playing in. It is best we know how to exit the trade anytime needed, as entry point may not necessarily be vital as when exit is needed.

Place yourself in the following situation; You're browsing Twitter and you see this

You see that whenever this kind of things happen, BTC prices rush. What would you have done before reading this class? What would you do now? Explain in details if there's something you should differently.

PRE-EXPERIENCE ACTION/REACTION

My reactions before my little experience now would be alittle that of a short term investor who has come to quickly benefit from immediate price changes. Because of the price rush, my immediate action would be, how do I buy-in a fractional value of this coin since I may not be able to buy in a greater amount of this well valued coin. As soon as I have a buy-in position into this coin, my next agenda is how do I make quick profits from the little price difference at that time since I basically have the experience of a buyer and seller investor whose motive is only to make profit and avoid unnecessary losses.

POST-EXPERIENCE ACTION/REACTION

My experience now with my little experience would be quite different. This is not the first time Bitcoin would be having any form of price rush, therefore the price rush would be temporary, given that it is momentarily influenced by sentimental forces which is classified under the sentimental analytical approach. My decision to invest any amount would not be on a short term basis, rather because of the future gains seen in the first generation coin.

For example, if the price at that given time is also seen at $62k , a price resistance level before the tweet went viral. There are all indications that this buy-in price may not be a palatable entry position for me at that moment because market may make that early bullish run but with quick response to correct/reverse itself. As a moderate risk aversion taker, My anticipated price changes geared towards profit making may not be huge to warrant such a spontaneous jump into the trade. So its a NO investment for me at this point.

But on the other hand, If I may want to have a say in the price differences due to the temporary price rush, I will definitely want to apply the use of my STOP-LOSS tool. This would increase my confidence level in my buy-in position irrespective of the price value at that point since I have a Stop-Loss tool at a standby to help curtail any for of unwanted asset loss. With this, I should be able to have a reasonable stay in my buy position bearing in mind the temporary stay of the bullish position as I also continue to wait for the "overbought" position (Profit zone) to make profits.

In conclusion, there's need to be guided and be put ourselves in check before engaging the trade. Issues of Overtrading should be internationally avoided so as to avoid giving room to emotional trading, revenge trading and FOMO which are vices that lead to asset loss.

Thank you Prof @fendit, this is my submission for the homework task