Scared money don't make money!

I'm sure you've all heard it before: "You shouldn't invest more money that you can afford to lose!". Wise advice indeed! - but in this article i want to dig deeper into the wisdom of this golden rule.

How can you tell how much you can "afford" to lose? The answer is quite simple, it is that amount - that if you end up losing - won't affect your standard of living. As you can see, it is not a specific amount like $1000 or $5000, it depends on your financial circumstances.

Another way to put this, is a disposable amount of cash that you are left with after all your monthly expenses.

So why is this a good advice besides the obvious? When you invest more money than you can afford to lose you are prone to making costly mistakes, because your emotions will negatively impact your decisions. That is what i call, scared money.

Scared money have a tendency to be in the wrong place at the wrong time. Scared money often get in after a big price jump because of the fear of missing out, which will expose them to having to endure price corrections. That is not an easy thing to do when you know you've gone in more than you should have.

The two most common scenarios are to get out of that transaction too soon, only to see the price get back up just as you are out, or to get married to that trade/investment and get out too late when most of your money have evaporated.

Even if you are lucky and the price continues to go up after you're in, scared money is still at a disadvantage to other investors who aren't driven by their emotions. Scared money almost always close the transaction in profit too soon, because they are afraid of losing that fragile profit.

On the other hand, somebody who has invested an appropriate amount, will make the right decisions most of the times. That wise investor will wait for a withdrawal before jumping in, will also have a clear stop loss and a reasonable target. He is able to patiently wait for his target to be hit.

With that being said, there's tones of money that can be made in the crptoverse, so i wish you all to stay green and have a strong hand.