Any fluctuation in the market can serve as a reason for speculation. Many people like to trace back to the source, which is also why dealers enjoy releasing news. Although it is difficult to discern the truth, the sheep in the 'herd effect' still rush in.


1. What is the herd effect?

"Better to be drunk with others than to be sober alone."

The phenomenon where a person's behavior is influenced by the behavior of others, leading to a uniform action, is similar to how the leading sheep in a flock dictates the direction, completely ignoring whether there are wolves nearby or if there are better pastures available.

This kind of 'herd effect' can easily lead to blind obedience. The dealer takes advantage of this psychology by initially releasing false information, and then slowly harvesting. By the time people realize, it is already too late.


2. Beware of the 'herd effect'; traders need to think more.


After a piece of news appears, we must analyze its potential impact on the market from an independent perspective.

All human behavior has certain motives and purposes. To discern the truth of information, remember this phrase: think more about who will be the ultimate beneficiary.

The market is a good touchstone to effectively test whether they are lying. The market will produce clear bullish or bearish effects, and we must wait until the market itself has validated our views before taking action. Never rush this moment; the market is never short of opportunities.

Protecting the principal is the way to go. Moving forward steadily will lead to ultimate victory.

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