How to eliminate FOMO and stick to a cryptocurrency trading strategy

Emotional investing has the potential to cause traders to act on impulses that can negatively impact their trading strategy and profits.

When it comes to investing, emotions might be one of the most difficult obstacles to overcome. Consequently, it is one of the main reasons investors lose money when trading cryptocurrency. Unfortunately, emotions are a natural response to the market’s ups and downs, as panic weighs in when the market dips or FOMO takes root as the price of an asset hits new all-time highs. As any investor would know, acting on these impulses results in selling too soon and losing out on profits or buying too late as profits take a downward turn. While these emotions are common in traditional markets, they are almost said to be amplified in the cryptocurrency world, which is notorious for price volatility that results in larger swings and higher rewards.

Emotional investing often occurs when a trader’s monetary stake and emotional stake are too closely linked.

Among the most known reasons emotional trading takes over is recognizing that a monetary stake is equal to one’s emotional state. Invested assets are seen as more than money; they are seen as what these funds could represent – whether this is a new car, luxury vacation or the elimination of existing debt, a mindset in itself that is considered rather dangerous.

Investors can attempt to overcome the emotional mindset by removing themselves from their investments, looking at their assets as an outsider.

In practice, this thought process might consider losses as an ordinary occurrence that are expected and are never more than the investor was willing to lose in the first place. On the other hand, being profitable is not an investor being better in tune with the market than the average person, but rather a happy coincidence occurring from putting their money in at the right place at the right time. Since this thought process is far from natural, investors must start with a small holding to help them build this mindset.

Automated solutions can help traders preconfigure their strategy, so they don’t feel compelled to act on their emotions.

In addition to mindset, eliminating emotional trading can further be accelerated with enabling tools. One of the most common is trading platforms that offer preconfigured buy and sell settings. These features can then help traders create and stick to a strategy, leaving their thinking up to an automated solution to execute. As an additional benefit, tools like bots help make trading a more passive experience that eliminates the need for investors to check the charts, an often time-consuming task.

That said, while bots have been proven to help eliminate some of the impacts of emotional trading, they do not guarantee profits or create a risk-free environment. Traders may then be cautioned to use a simulator to test various features with fake funds before putting any of their real assets on the line.

New tools, including strategy packages, market scanning algorithms and other sell features, help automate an investor’s strategy.

The HitBTC exchange and a crypto portfolio management tool Cryptohopper have partnered up in developing a solution that uses bots to help investors overcome emotional trading. Cryptohopper leverages their Marketplace Signalers option to help users by following the lead of experienced traders. Currently, this solution uses insights from 55 professional traders, each of which is available for an investor to choose to copy. After making their selection, the bot can manage their portfolio automatically. As an alternative that allows users to stay in control, the platform also provides several strategy packages, complete with market scanning algorithms. As an added advantage, these strategies aren’t just taken verbatim and can be tested to the extent desired to determine whether they will perform efficiently in the market. This offering is a possibility through packages built by sellers and made for sale in the marketplace.

Cryptohopper is further providing users with the opportunity to receive buy and sell signals without any coding through a feature called “trading strategy.” By using popular indicators such as RSI, EMA, CCI, Hanged Man and candlestick patterns, to name a few, mathematical data is made available to an investor to help indicate when to buy or sell. This is combined with the tool’s ability to continuously scan the market in search of an overlooked opportunity.

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