Reacting to the Market: What to do and when

By |2019-03-15T23:02:41+00:0015 March 2019|

In the constantly changing world of cryptocurrency, predictions seem next to impossible. While there are dozens of factors affecting the market each and every day, the only one you have much of a say in is your reaction. Whether you get your news from a reputable site or you catch all your crypto tidbits browsing social media, you’re guaranteed to see something that will cause an immediate reaction. While reaction is inevitable, it’s important to understand how to channel those reactions to avoid mistakes and even optimize investments.

 

What deserves a reaction

First and foremost, don’t overreact to a tweet you saw, even if it was sent out by someone with a blue checkmark. Heated reactions to social media trends have single handedly caused swings in the market due to people reacting without any facts. For example, just because you see someone tweeting that Bitcoin prices are going to fall doesn’t mean you should sell all your Bitcoin. If enough people react that way, the price of Bitcoin WILL fall– all due to overreactions.  Instead, focus on reputable news sources. Choose to follow an established cryptocurrency news site, blog, or professional company. Always be sure to diversify your news sources to ensure a well-rounded viewpoint of current events.

 

How to react

So you’ve seen something that has caught your interest or maybe spooked you. You might be second guessing an investment or wary of making any new investments. If you’ve come across something you think warrants a reaction, remember these three steps:

  1. Relax- The last thing you want to do is overreact. If you’re alarmed by a change in the market, stop and take a second before doing anything. Remember that the market is volatile, and changes are inevitable.
  2. Research- Don’t believe the first thing you read. Instead, do plenty of your own research. If you see something on Facebook, search for current news articles on the same topic. The best thing you can do is to get a full understanding of what could be going on.
  3. React- Finally, once you have all the facts, react. If you’ve done all the research and are confident you aren’t acting on a whim, take action. Sell, buy, trade; whatever the circumstance may be, make informed decisions.

 

Smarter reactions lead to better investing. Cryptocurrency is still a wild west market where practically anything can go. If you find yourself reacting to every small dip and rise in the market, you’ll run yourself ragged before you can ever enjoy the ride. Most importantly, making smart investing options (like never investing more than you can afford to lose) helps to decrease the potential of dangerous overreactions. Fore more information regarding safe investing, review our blog post here. You can also download a free ebook all about cryptocurrency investing here .