7/13/2022 - Technology and Innovation

How to avoid the model of retail investment cycle and be sabotaged by behavioral prejudices

By Juan Bautista Selvatici

How to avoid the model of retail investment cycle and be sabotaged by behavioral prejudices

Retail traders are dizzy optimists during a bull market, but do not know how to keep up dizzy optimists during a bear market. Get out now, get your losses and get back to the top. Get up and repeat.

The feeling of the market changes all the time, but the foundations do not. Technology has not yet been anywhere, retail investors continue to sabotage their goals through irrational behavior. But it is not your fault, emotions are encoded within our genes, and become inherent to us.

Then I will make a quick guide on what I learned about emotions through 6 years of trade and live enough markets to understand how fear and greed works.

The human mind is absolutely the most difficult machine in the world. There are no two of the same kind, but we can agree that there are standards. However, the brain under the stress of financial markets works in a very different way.

Let's say you see 80% discount on a pair of shoes you would like to wear. You definitely would. You run to the store and enjoy this great opportunity.

Now imagine that you believe in the technology and foundations of an asset like Bitcoin, we can say that "how" Bitcoin the same way you would like to wear these shoes from the previous example. Bitcoin drops 80% of all the time. You bought it?

Incredibly, the answer tends to beNo. They sabotage you so hard for your emotions that make you stop believing what you believed earlier. Your mind tells you that Bitcoin is a scam right now. But first of all, his mind believed that it was the financial revolution, the incarnation of anarch-capitalist movement and the mother of decentralization and the fight against centralized organizations.

Big money is made during the BEAR markets by people who have an incredible conviction about a very specific asset or technology. These people called "small" are those who have patience and go against their emotions. The bottom is usually when the afternoonrs are in their maximum pain.SeeFear and greed indexto potentially identify the background and the upper part.

Some gifts for you:

1- I know codicious when others are fearful. You're afraid when others are codicious.You may have heard this before. But fear still arrests you.

2- Be loyal to your convictions.I know that maintaining your positions during prolonged reform is extremely difficult. But during that time, they build millionaires.

3 Stop overestimating what you can achieve in 1 year and underestimate what you can achieve in 5 years.People study +5 years to become who wants to become. Still you want to dominate the markets in 1 month. Trading is a marathon, never forget.

4- Plan, plan and... plan.If you do not plan, you are planning to fail. Create a system, support it and comply with the letter.

5 Understand cycles.Bull markets make you money, bear markets make you rich. Respect time and adjust your system depending on what the market tells you. When the bull distributes when the bear accumulates.

6- History does not repeat, but often rhymes.Why would someone again bet an asset that has taken repeated 90% of scams and responded with 20 to 1000x rally? Transfers are part of a healthy price action. Don't believe they're the enemy, they're actually your friend. They give you second chances.

7- Tom Dante knows how to say:

Welcome to the hardest game in the world.

Unfortunately, you are playing with some of the most acute, faster, intelligent, well-informed, terciously irrational minds and in many cases unethical in the world.

You are against the computer that can react faster than you.

The trader who has more experience than you.

The fund that has more money than you.

The interior that has more information than you.

The others who will misinform you.

The inner voice you will do is better to get rid of.

Then leave all your dreams of making money fast and easy.

The first goal is survival.

Your first absolute goal is to learn how to stay in the game.

Only this can be done through the assignment of the territory.

Understanding how the enemy thinks and acts.

Having a solid game plan.

And choosing their battles very carefully.

Ready to play?


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juan bautista selvatici

Juan Bautista Selvatici

Lawyer and QUANT passionate about finance and fascinated by human behavior.
Smart contract auditor in decentralized finance applications (DEFI). Commodities trader at Audacity Capital. Developer of algorithms based on mathematical models that mitigate risk in digital asset investment at Seltik Digital Assets.
Fan of nothing, nice to some, courteous to all.

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