Crypto Academy Week 12 Homework Post For Professor@fendit Don't Get Lost In The Fuzz

It's another great opportunity to share my knowledge on this great platform. Thank you professor @fendit for this great opportunity.

How do you describe a scenario where finally lay your hands on valuable coin, highly spoken of with glamorous advantage of increase and rise?The excitement is nothing to be compared with, but just before you realize...it begins to decline uncontrollably, not exactly how you planned. What do you do? Act fast and sell, purchase more to reduce loss, exercise extra patience.
Just before you take the first 2 options, take a look at the third: exercise extra patience . Why? You want to ask?

1. Emotions are controlled
2. Gives room for explicit study
3. Strategic planning

The rise of market of market sentiments increases the chances of purchase. When prices rise it is termed as a bullish trend while the low price is called a bear market

KNOW THE MARKET

Understanding the market is avery vital trait that helps the trader know the market trend. Investors tend to study the market trend and note the psychological cycles in different angles. Ideally, purchase will be made when there's fear and prices are very low and sales when the prices is really high.

Back to the question

My reaction to a sudden dump in Btc price from 62k.

What I would have done before this class
I would have been in a hurry to act fast, for me that would have meant a wise decision to avoid loss. Now I know better.
What I will do now.
I would say the class by @fendit is truly an eye opener.
I would strategically observe the PRICE CHANGE
If you notice, you will realize that the bitcoin is still within a reasonable price. It would excite you to know that the crypto world is a world of wins and losses and the fact that it decreased, doesn't mean that the end of it. Although, it doesn't stop at that.
Secondly, I will set up a STOPLOSS
The effect of this cannot be over emphasized and it helps to limit losses in an investment. More investors should give it a thought and begin to implement it . I call it " The smart way" .

Image source

Thirdly, invest in what you can loose.
Investing finances meant for important use is not advisable. In my words, I would say"it is a crime". It is highly advisable to invest with only what you can afford to loose.

My experience when it comes to making mistakes in trading.

Being new to the crypto trading, I would say I am conservative and learning from other before launching out. But, I would share an experience that almost cost dearly.
Some weeks back I heard about a new coin which I thought was highly profiting and wanted planned to use some available funds saved for a certain need and pay back later after gains has been made. Only for me to discover the drastic fall of the coin after a while.
I learnt some basic lessons which include:
Analyse critically before launching out.
Never ever invest what you can not loose.
Never rush to invest for the FEAR OF MISSING OUT.

When I come across Tesla's tweet
What would I o before the coin

I would race swiftly to purchase my share of the coin. "After all, everyone desires a good investment". My decision would have been fueled by the positivism in line with that statement.

What I would do now

I will still buy anyways, but with a more informed guideline:
I will control my emotions
The rush to invest blindly is now a thing of the past as I know better.
During the period of market increase and visible expansion (bull market) there exist the air of positivism , belief and selfish interest etc . These basically leave a high buying activity. The higher the prices, the higher the positive response. In this case, investors turn blind eye to rational thought , they tend to buy only a certain type of asset not focusing on the rest.

Know the market

All market experiences different forms of expansion and contraction at different levels at different times. This is likened to human mood swings. A joyful situation naturally put smiles on people's faces while a bad event like (death) naturally leaves the face looking sour. So it is in every month. The feeling of power, fear etc will set in as the price starts to drop. Questions starts arising raising doubts on how long it will take. The strong investors have the courage of possible increase and will prefer to hold instead of selling at a loss. As the prices falls more, more fear creeps in , panic becomes the order of the day and leads to CAPITULATION. At this point holders release and sell assets.

Set up a stop loss

I will set up a stop loss of 10% drop in price. This will enable me not loose up to half of my investment.

Invest what I can loose
Now, this is highly important. The trade is a risky one and if I don't want to shed tears of regret, it's better I invest what I can loose.

In conclusion

As much as we all want to make profit from every investment. It is pertinent to trade by observing the price change, set a stop loss and invest in what you can loose.