We all know that feeling, maybe you were out when the news arrived, or you were in the bathroom, or making dinner or asleep.
You open up the charts, price-tracker, delta, blockfolio or twitter and it’s one of the two bogeymen of the crypto world. A sea of blood in your bags, or you missed a pump, or you missed a token launch, or one of your bags on an exchange has been hacked.
Your pulse rate increases, pupils dilate, the adrenaline starts to flow; you flick through browser tabs searching for more info to confirm what you have learned, you can feel a scream building inside your head…
‘No, no, no, NOOOOooooo!!!!!!!’.
Someone DM’s you ‘looks like you missed out dude’ or ‘RIP’.
The fear of a lost opportunity or of huge damage to your positions kick in – what to do? WHAT to DO?
Congratulations, you are in the grip of FUD or FOMO.
FOMO – Fear of missing out.
FUD – Fear, uncertainty, doubt.
The first thing is not to worry – this is a perfectly natural response to a threat to perceived interests and your security. Traders and HODLers identify with their bags, they become a part of you in that they are part of your ‘interests’; this doesn’t mean you have fallen in love with them and can’t part with them, it just means that whilst you have them they are a part of your portfolio, and your subconscious response is to respond as it they were a part of you.
You have interests and specific purposes for holding them and therefore they are part of your plans, usually for profits.
When an event or a party/parties derail your plans this is perceived as a threat to your strategic interests and you are now subject to an evolutionary response to threat – namely the ‘Fight or Flight’ response.
It’s quite unpleasant and most of us hate it, but every human has it for a reason – self-defence.
It enables us to recognize threats and act accordingly.
Unfortunately, it never evolved to actually enable us to act rationally in the face of financial threats and it acts on a primal level, overwhelming our capabilities to act calmly and rationally to determine the best course of action.
This is a limbic response, a primal emotional response, and it’s quite difficult to deal with and usually results in taking the wrong actions – resulting in even more damage.
In this piece I hope to give you a little detail re what this actually is psychologically, how to recognize it and strategies for dealing with it.
The first step in dealing with a problem is to understand it.
Bluntly put, what we have here is a fear trigger. An event of some kind is evoking a response to a perceived threat and responding with an evolutionary learned response governed by fear.
The fear can be a fear of loss of an opportunity for gain (FOMO) or fear of being ‘damaged’ in terms of your bags/assets (FUD).
At it’s most basic level that’s all these things really are – the triggers may differ, but in essence the responses are identical.
These manifest in specific ways within our bodies:
Also triggering cognitive reactions:
As this chart shows with a clearer graphic:
So…what’s to be done?
Well, quite a lot can be done. However I am not going to list tactics and strategies just yet since everybody is making money in crypto in different ways according to our preferences and skillsets. Also, psychologically we are all different; what works for one person may not work for another and we all need to find our own paths for dealing with these things effectively.
The first step is to recognize what is happening to you.
Learn the symptoms and the triggers and identify the onset of FUD/FOMO, not by what has happened because that can be different in every case, but by what is happening to YOU physically and psychologically.
Realising that you are experiencing a fear-driven reaction as detailed above is the first step in dealing with it.
The second step is to remove the physical source of fear and its amplification.
This means take your hand OFF THE MOUSE first of all and step away from your tech interface (I am QUITE serious) – be it a phone, PC, laptop, tablet…whatever it is.
Stand up and walk away from it and take a deep breath. If you are in a room, leave the room if necessary. Ten minutes or so away from it isn’t going to make things significantly worse, nor can you influence/mitigate/fix in ten minutes what is going on.
Recognize that fact and don’t be a rabbit in the headlights – remove yourself from the source of harm/fear that is preventing you from acting rationally.
The third step, once you have physically removed the source of FUD/FOMO is to take a few deep breaths and start to think – slowly.
Complete those first three steps and you are ready to think about what, if any, actions you can take in a calm, reasoned, rational and maximally effective manner, without being controlled and driven by purely limbic physical responses over which you have no control.
This requires a strong will and discipline, there are NO short cuts here.
If you are to take responsibility and act appropriately you have to own your fear, face it and take steps to reassert control.
Fear can act as a spur to effective action and actually help you deal with things but NOT if you allow that fear to take control of you.
Having taken those first few steps you are ready to start thinking about ways to deal with protecting your portfolio and with what you are going through.
Tactics – The Art of War (vs. Fear)
Fear is a form of harm if not controlled. In fact, it is safe to consider that fear is also a form of pain since it causes significant discomfort physically and psychologically. If you live your life in fear you can never achieve anything.
Indubitably it exists as a form of pain.
This will take the form of a list, the idea being that since we all make money in different ways and are different people.
You can cherry-pick the things that work for you and/or add more so that you can deploy an effective set of tactics etc that work for YOU.
It’s important to bear in mind that some of us are FA people and some TA, some traders and some HODLERs/investors; also some are lucky enough to be skilled at both.
No generic homogenous approach can work for everyone, but there are common elements that can be identified and used according to our needs and mindsets.
- Identify what kind of money-maker you are and recognize your strengths/weaknesses. If you are a HODLer/investor then don’t think like a swing/day trader. You are in your bags for the longer term for specific analysed reasons, so stick with your plan – period. If you are a day/swing trader then you should have set appropriately positioned stops which should have cut your losses, letting you regroup with minimal losses; if you haven’t, then accept that you have learned a valuable (if pricey) lesson and adjust your strategy accordingly.
- Do NOT calculate and convert back and forth from FIAT in total or specific values – seriously, this only makes everything MUCH worse. Fiat values reinforce greed in cases of FOMO and fear in cases of FUD. Keep EVERYTHING in satoshis/coin units. This may sound weird but it WORKS.
- Never deliberately sell in loss; stops are different since they execute automatically and act as a safey valve/acceptable loss. Consciously placing and executing a sell order is quite different. It indicates tht you lack the courage of your own convictions and strategies and only undermines you subconsciously – as well being just plain dumb. If you are bagholding then you have to simply accept the fact and wait; this is a young market and you will get what you want – in time.
- Buy quality and manage your own expectations – DYOR and be realistic; there is no substitute for hard work.
- Execute YOUR PLAN – not someone else’s. Before you buy an asset plan what you want from it and stick to the plan.
- Focus on things YOU can control/influence, don’t waste time/energy on things you cannot control/influence – and learn to recognize the difference.
- Patience is essential. This market is maturing way faster than any other in history, and I strongly suspect the days of ‘wen moon’ and 6 month Lambos are OVER. Deal with it and plan/act accordingly.
- Keep your perspective – are you being physically harmed by this? you invested money you could afford to lose and always knew there was risk. Sometimes some losses are the price of doing business (executing stops etc). Accept it and move on.
- IGNORE THE MSM and pundits and salty morons on twitter – they only make things worse. They have an agenda and it isn’t your agenda. Follow your plan – not theirs.
- If you missed an entry and feel FOMO pressure to enter late/immediately be VERY careful and evaluate in DETAIL if that is a good idea before you do ANYTHING. Buying the top REALLY sucks, believe me. If you are even slightly unsure, then don’t do it. This is a very young industry and there will always be another profit-train along in a while – maybe an even better one, as we all know.
If you find you can’t develop the mental strength and discipline to take the hits and keep going, if you can’t pick yourself up and learn from the experience then maybe this isn’t for you after all.
There are other ways to get involved – get a job in the industry instead. There are many kinds of vacancies now, and most of them are not technical.
We can ALL contribute something – every member of the community has the potential to add value in some way, for themselves and for others.
There is no shame in that, in fact it is a source of strength and self-respect.
I hope that this short piece helps people to deal with the insanity and stress of this incredible rollercoaster we are all riding together.
We are all stronger when we help and support each other – and remember: