VOLATILITY A trader’s paradise but an investor’s nightmare. In essence, volatility can be broken down into two things — A measure of human emotions (FOMO buy and panic selling) and lack of liquidity. : We all know that humans are fickle-minded creatures. I am certainly one. Watching something go up green can induce FOMO buying. Watching something keep dropping can cause us to panic sell. It’s a snowball effect. We had a massive run-up in Dec/Jan purely from FOMO-buying by retail investors. Similar to June 2017 when most altcoins (at that time) printed their ATHs. Human Emotions . It is a constant push and pull from those who entered early and are selling for profit, and those who entered later buying the bags of early adopters. Third law of Economics: Supply and Demand. Emotions are the main driver of markets : This basically means, $1 million dollars can cause massive spikes in low-cap coins. $1 Billion Dollars can shift market sentiments in , the market gauge of the crypto-market. As compared to the stock market where it will require billions and billions to move it by a few percentage. Lack of liquidity Bitcoin Especially in Cryptocurrencies which is infamous for its volatility. With the right setup and TA skills, traders can easily make good money by swing-trading altcoins or Bitcoin on leverage. All they need is three things: macro trend (bull or bear), major support and resistance, and a high probability setup with proper risk management (stop-losses, R:R). Traders play the short-term game. Why traders love volatility? Pure Investors only care about one thing- Assets going up, making profits. So what happens when that asset keeps dropping? Thoughts, prediction enter the mind- “do I cut my losses, do I hold on, but this guy says to hold on, that guy says it is going to fall.” Also true, if the asset keeps going up, we will have thoughts like: “MOON! This is going up forever. No way it will drop now.” Volatility can induce more volatility until it reaches a tipping point. Investors are playing the long-term game. Why Investors hate volatility? So are there ways to counter this? Unfortunately, to counter volatility as an investor is NOT easy. The level of difficulty varies depending on your entry. The lower your entry, the easier the game is. Yes yes, the main words HODL. Volatility, as mentioned above, is a measure of emotions. We constantly hear people saying “don’t trade with emotions” etc. True enough, the one strong defense over volatility is to HODL and ignore it. Watching charts every day can affect your decisions especially to new investors who do not understand technical analysis and how the market works. Stick to your FA guns, the very reason you invest in the first place (not the ‘I want to make money’ reason), and focus on long-term! Long-term here means years. By holding (and standing by it) through volatility, you eliminate over-trading and emotional trading. [1] — HODL through volatility “TA does not work in Crypto”. Very true but we have to understand why that is. Remember I mentioned why traders love volatility? These ‘traders’ can be whales and manipulators. They have bots, TA experts and FUD machines to move markets. They would make more money than HODLing (they, of course, also hold some for long-term). And plus, is it not funny that everyone here is an investor and holding Bitcoin long-term but the price keeps dropping? So who is selling? The traders of course. And how do traders determine the ‘best price’ to sell? By using technical analysis of course! By ensuring you enter at the right prices, you eliminate emotions from volatility which makes it easier to HODL [2] — Technical Analysis Understanding how TA works and applying its theories in the crypto market is essential. Hopefully, during my 1-month stint in this group, I will be able to share my trading/investing philosophies on how I determine my entry points that prepare us for the long term game. ~ Richard Thaler. “Be a lazy investor — buy and forget. Change channels. Turn the show off. ” The statement explains [1]. It is that but in order to not go crazy, we need to have [2] to determine a good entry. simple Have a good day folks! Hope this helps somehow. Stay safe!! — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Follow me on to receive instant updates on my upcoming articles where I discuss topics revolving Cryptocurrencies, Investing in general and Technical Analysis. Medium _Disclaimer: Points shared in this article are based on my own personal understanding of the Cryptocurrency space. They…_hackernoon.com The Book That Changed How I Manage My Crypto Portfolio Do also follow me on other social media platforms: Twitter Youtube — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Iliya Zaki is the Marketing and Community Manager for Moonwhale Ventures. Moonwhale Ventures is a Consultancy for Applications in Corporations, SMEs or Listed Companies to improve the efficiency of the value chain, and new innovative ways to funding business expansion through STO, ICCO (tokenization). Blockchain Visit our website for more info — http://moonwhale.io/ Follow us on our various social media platform. — Instagram Twitter LinkedIn Join our Telegram Global group — https://t.me/moonwhaler
