It is a popular saying that when you focus on making money, you lose money. But when you focus on losing money, you lose money even faster. When you care the least about making money, you become a millionaire. But then you get greedy and decide to wait a bit longer, hoping you would multiply the amount only if you hold on a little more.
You wait a little longer, controlling your desire to make a quick buck. But then it flat-out crashes the next day, and you lose everything!
Did you imagine yourself doing the same? If yes, then you have been bewitched by cryptocurrency, my friend! Don’t let greed blind you – don’t wait a few days more – just cash out!
Here are 7 reasons why you should never be greedy when trading with cryptocurrencies:
Fear of Incurring Huge Losses
When you decide to invest some part of your income in buying cryptocurrencies, you should learn about the risks present in the market. It is vital to prepare yourself for the worst as there is no guarantee that you will only make profits. If you lose a huge chunk because you waited a little longer, you will regret it for the rest of your life.
That is why it is advised to learn the art of trading beforehand.
Do not purchase huge stocks at once – but start with a small amount, then go bigger. Do proper research to get a hold of the most profitable stocks; otherwise, you will lose all the money in the blink of an eye.
You Cannot Become Rich Overnight
Accumulating wealth in the shortest amount of time is the desire of the majority of the people trading in the cryptocurrency market. However, greed has never resulted in a positive impact, which we can also understand from a real-life example of the stock market, which is very similar to a crypto market.
In the 1990s, the influx of internet-related organizations is a prime example of this concept. Here is what happened during that time:
- Investors leaped at the opportunity of investments that involved a dot-com organization. It resulted in a huge growth of the industry at a very fast pace.
- It also resulted in the surge of prices of securities and the formation of a bubble.
- The bubble exploded during the mid-2000s and weighed on the leading indexes through 2001.
The opportunity to make fast and easy income lured several investors, which resulted in ignored rules and regulations and the fundamentals of investing established during the investment plans. Instead of impulsively investing money, take your time to understand the market.
Negative Impact on Your Portfolio
Before trading with real money, practice in a simulated or paper money account. If you do not have access to a test account, aim for small gains. If you trade big and lose everything, it will have a negative impact on your portfolio.
So, try not to put everything you own in one financial product. Invest in crypto but do not spread your money across non-crypto investments. Make small purchases until you gain the knowledge and confidence to make big investments.
Bad for the Crypto Market
Greed contributes to a plunge in the cryptomarket as speculation on new projects having low prices divides the capital and draws strength away from serious projects. It is further fueled by the recent stimulus cash infusion that people received during the pandemic.
While some invest after doing thorough research, others invest in the hope of making money overnight. It has created a flurry of new coins that have no utility besides playing on memes and following trends. It has only divided capital and undermined the initial purpose that Bitcoin hopes to fulfill.
Highly Unstable Nature
The highly unstable nature of e-currency makes it a foolish decision for people to invest large sums in it. Whenever you trade in something that has a volatile nature, only take half of the gains you make and sell the rest – but do take something off the table. While trading with crypto, it is easier to become greedy, but please try to resist this urge.
Owing More than You Invested
It is common to borrow money from the brokerage in a crypto market to increase your purchasing power, especially when you go on a margin. If you make the right choice, you will make substantial profits; but you may owe more than you invested if you are wrong.
That’s why you should never borrow money to buy a cryptocurrency and control your insatiable urge! Visit the go URL to learn everything about the digital currency market in detail.
Easy to Manipulate
Trading via crypto takes skill, discipline, and due diligence. You cannot become an expert in trading overnight – so take your sweet time. The worst part is that the digital currency market is populated with dark money and manipulators who give misleading advice for free. Many people have lost their money, not while trading crypto but duped by these manipulators.
So, stay vigilant!
The Bottom Line
Greed has appeared multiple times in the crypto market; that is why we have curated this blog to make you understand why it is a wrong decision to bring it while trading. It arises when a trader takes advantage of a winning opportunity to expect the market to continue to be on his side but lands them in a difficult situation.
The fear of losing money and the greed for making more money – people are usually torn between these two choices when trading in a crypto market. Though these are the chief drivers of a financial market, they do not play as much of an important role as we think they do.
When trading with digital currencies, it is crucial to understand when to embrace and when to tame these emotions that engulf you from time to time. Doing this would bring a major difference between a successful and a short-lived trading career.