What I Learned from Investing (or “Playing”) with Cryptocurrencies : The Nature of Humanself, Greed and FOMO Mentalities

Disclaimer : This post is repost of my writing from medium (https://medium.com/@brianazeri/what-i-learned-from-investing-or-playing-with-cryptocurrencies-the-nature-of-humanself-greed-d82bc4757588)

Greed and FOMO (Fear of Missing Out) are the two mentalities that struck down to me these past few months ‘playing’ with bitcoin and other cryptocurrencies. Cryptocurrencies are highly volatile asset after all, you can get rich or get burned if not ‘play’ carefully. For example the rise or downfall of two digits percentage is common in cryptospace, either you double your money (even more! 10x is possible) or lose most of them. The few things that i experienced these past few months ‘playing’ with this dangerous games are GREED and FOMO mentalities. These two things are the main reason people (and me), get burned and lose money. With no barrier to entry, unregulated market, and highly volatile price movement, anyone can join and ‘play’ fire with bitcoin and cryptocurrencies. Most often people will taste their first win entering the market, give them the taste of false hope of how easy to get money from this market (yeah, also me). Without any risk management and proper strategy, most people will get in and take ‘casino’ mentality. Hoping they will win just by luck rather than proper strategy. This is indeed the perfect market for price manipultion and pump and dump scheme. The smart money will buy first, accumulating when the coin is cheap. Then the dumb money come later, people buying when the price already rose 20, 30, even 100% (even 10x!). When the price peaked, the smart money will took of their profit and become richer, meanwhile most people get burned and lose their money.

What i said above is what exactly i did, i was the one of the dump money involved. Bought something when is up rather when its still cheap. When i look at chart and see in front of my eyes that some coin rose 10, 20, 50%, i cant help my self from the FOMO mentality. FOMO mean Fear of Missing Out, the feeling that urge yourself to follow other people without any rational decision backing in (in this case buy coin that price is increasing rapidly). The feeling to buy coin the already rose 10, 20, 50%, even you know that is a bad idea. I KNEW it was not the right thing to do, but my hand itching to click the buy button. Most of the time i ended buying it, some i gained profit, the rest of them big lost (the record of mine i think about 40%). The best buddy of FOMO mentality is greed mentality, these two are the devils that i believed life inside every human being (or atleast most of common human being).

I bougt right at the top (Rp 35.000.000), lost about 30–40%.

The greed will come in different situation. Lets say i already bought coin at cheap, and now that coin rising rapidly 20% every day. Should i sell? or should i just let it be? hoping the price will keep rising?. When the coin rose 100% after you bought, what do you do? do you sell? or still holding? In this case the greed will take over your rational choice, you know that take profit at 100% gain is good idea, but the greed will whisper to your ears and say that you should hold and not sell that coin, the greed will say that is will rise another 100% easily. And thats what happened to me, i saw the coin that i hold rose 100%, instead of take profit the greed took over myself and i ended up lost 10%. The problem is with greed mentality is, i exactly know that its greed that possesed me, but somehow the greed always win.

Can you spot the greed is? hm.

Now those experienced i used as reflection to myself, to realize that i am greedy, that most human are greedy. Realizing greed inside yourself is they way to fight and defeat the greed. Now i am learning to fight greed inside of me, when i entered a trade i have strategy involved. I will take profit when it hits my target, i will stop lose if the trade doesnt go to the direction i want. I glad i ‘play’ with dangerous fire this early, to realize that greed is real thing and to learn from it as soon as possible is mandatory.

These two mentalities and experienced told me invaluable lesson to reflect on myself, that i have greed and FOMO mentalites. We as human being, should be rational, greed and FOMO are irrational. Strategy, disicpline, and risk management are golden tickets to win over time in this cruel market. The cruel market that resemble this world we live in.

Moral story of the day : dont be greedy, be happy.

Note : I am not native english speaker, so positive feedback on my english will be apreciated!