Everyone knows about #FOMO and #FUD , but there are other traps that sneak up unnoticed — especially when there is noise, panic, and a flow of geopolitical news around.
Let's remember them in the selection of posts:
1️⃣ Confirmation Bias: You search for and interpret information in a way that confirms your existing beliefs. If you believe in the growth of a certain coin, you will only read positive news about it and ignore all the bad.
💡 How to avoid: Don't ignore and study information that contradicts your beliefs.
2️⃣ Endowment Effect: We tend to overvalue the worth of what we already own. If you bought an asset, you might consider it more valuable than it actually is.
💡 How to avoid: Treat your assets as if they belong to someone else. Ask yourself: 'Would I buy this asset today at the current price if I didn't already own it?'
3️⃣ Anchoring Bias: You rely too heavily on the first piece of information received (anchor) when making decisions. For example, if you saw Bitcoin at $100,000, then the price of $70,000 may seem 'cheap,' even if the fundamentals have changed.
💡 How to avoid: Periodically conduct new analysis without being tied to past prices or first impressions.
4️⃣ Illusion of Control: You overestimate your ability to control the outcome of events that are essentially random. For example, believing that your 'analysis' or 'gut feeling' can predict market movement.
💡 How to avoid: Acknowledge that the market is unpredictable. Focus on what you can control: risk management, diversification, position size, and adhering to your strategy.
5️⃣ Gambler's Fallacy: Belief that past events affect future ones, even though they are statistically independent. For example, if the price of an asset has fallen for several days in a row, you might think, 'it will definitely rise now.'
💡 How to avoid: Remember that each event in the market is unique. Past movements do not guarantee future ones.
Have you encountered something similar? Write in the comments ↓
All of this is relevant not only in crypto but in any markets. We will analyze the other traps in the following posts.