Today i am writing homework post for Professor @allbert which is about "Psychology and Market Cycle ". Let's begin :

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Explain in your own words what FOMO is, wherein the cycle it occurs, and why. (crypto chart screenshot explanations needed)

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FOMO stands for "Fear of missing out". As we are dealing with market psychology and market cycle. Fomo comes into play in the bullish market when the price has saturated for that phase but due to fear of missing out the ongoing bullish asset, one enters market at wrong time.

^{FOMO occurs near peak ot bullish phase as shown above. There is no set single point that can be labelled as FOMO but it is evident that it occurs towards peak}

It is quite common these days, most of newbies and relatively less experienced traders tend to buy stocks/commodities/cryptos based on news. Isn't it ?. News may be from print media, electronic media or from friend circle. Often such news come when asset price makes significant hike and by the time, we enter into the market , stock price is already skyrocketed but due to fear of missing out, we still cannot control our emotions and we enter at wrong place and burst our savings.

In a bullish market, as price of asset keeps on rising, combination of emotions like optimism and hope of forthcoming more stronger price spikes and greed of booking more profit arise within us . As cryptocoins have no intrinsic value, therefore wild price swing in either directions is possible. So to guess the direction of price rally with certainty is impossible. Some traders fear missing bullish rally and the greed of profit thereby as they hope further price hike and enter the market at the peak and therefore land into trouble or loss due to subsequent price drop.

So to sum up, FOMO occirs at the climax of bullish rally because of greed/hope of being rich with those who are already driving the price rally. But the situation doesn't go as expected because of bears or sellers dominating over bulls and succeed in pushing price down.

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-Explain in your own words what FUD is, wherein the cycle it occurs, and why. (crypto chart screenshot explanations needed)

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FUD stands for "Fear , uncertainity and doubt" FUD comes into play towards the near exhaustion of bearish market trend due to fear of further loss . So during declining price of the asset, one exits market as price of asset seems falling continuously . Combination of emotions like fear, pessimism and hopelessness during downward projecting rally of price make traders sell their holding even in loss to prevent further loss. But that is not actually going to happen . More emotional foul play is escalated during the forthcoming bullish trend. So due to FUD, firstly the trader sells his assets in loss and secondly he is not able to accrue benefit out of forthcoming bullish rally .

^{FUD occurs during bearish phase when people notice falling price of asset . No single point can be labelled as FUD, but It occurs towards end of bear market.}

Let's correlate it with the example, suppose your friend suggested you to buy a crypro "A " at 100$ and you agreed with him and bought it. After few days you saw price of asset started falling but you are able to control your emotions with the hope of pullback and bagginflg profit. Market did gave some pullbacks as usual . Markets don't rise or fall linearly. So you kept holding your asset because pullbacks were not satisfactory. But than things didn't seem working your way untill you saw price of "A" dipping down to 60 , 55 and than 50$. You became so hopeless that you feared asset "A" was going to dump into ash. Out of frustration, fear, uncertainty amd depression, you decided to save at least 50$ and sell your crypto. With further price dip to 45$, you starting feeling better because your decision had seemingly saved your from further loss. But it didn'last longer untill few days later asset price started undergoing correction and jumped above 100$ , let's say to 125$. Now you again started screwing yourself for not having only sold asset "A" In loss but also having missed the forthcoming gain. All this is attributed to FUD during downtrend.

To sum up, FUD occurs when the downtrend is about to exhaust due to seemingly dominant sellers being defeated by bulls in the immedate bull rally that follows FUD.

Choose two crypto-asset and through screenshots explain in which emotional phase of the cycle it is and why. Must be different phases

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The ctypro assets that i have choosen for this task are Polkadot (DOT) amd Ripple (XRP)

DOT

As seen in chart above, market emotion linked to DOT at the time of writing this task is "disbelief" prior to hope. As the DOT has completed previous cycle, although price of DOT has started to increase but people still hesitate to enter , they relate it tto sucker's rally. Only a handful of traders regain confidence during this phase to enter with the hope of subsequent price hike. As long as trend is not crystal clear, most people are reluctant but once it is clear, scores of people will enter with hope and optimism and push price rapidly up.

XRP

The emotional phase that can be linked to XRP at the moment is Panic. We can see price downfall has begun. Whales having taken out their profit, that has caused price to fall and spread panic among people. People have started selling their assets and price is expected to fall further. We are yet to witness further price drop and push people into anger and depression.

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Based on the analysis done in question 3, and the principles learned in class, make the purchase of 1 cryptocurrency in the correct market cycle. The minimum amount of 5USD (mandatory), add screenshots of the operation and the validated account.

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For this task, I will be purchasing polkadot (DOT) coin from my WazirX account. I choose DOT because from the above analysis, we expect price to rise as the next phase to follow is of "HOPe ".

Before doing purchase, let me share my verified account details .

Sensitive content partially hidden

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• Launch my wazirx app, on the main page from the bottom panel, click on "Exchange".

• Next look for DOT. Search option is also there to directly search for target token.

• Click on DOT/INR pair, next click on Buy/Sell. Amd select Buy.

• Next select amount of DOT to be purchased. I choose 1 DOT which costed 1086.3 INR ( 14$ approx) .

• Next click on "Buy" And we are done.

• Next I'll show you same from history.

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Conclusion

We kow that crypto market is very unpredictable but the emotions linked to market are predictable. Human behaviour is very much predictable. when we lose something, we feel sad and when we gain, we feel happy. It is universal and certainly predictable. Similar, principles of psychology hold true for market too. So if we can keep control over our emotions, we can make better out of the market. And we should invest only that much amount, which can afford to lose.