Ostriches Herd

The herd behavior and how you can use this to think about your crypto investments

By PsyDoc | Mindsetprofit | 16 Dec 2021

The herd behavior in when a group of animals acts together toward a direction. They are not following a leader, they kind of follow a “collective mind” that results from the encounter of all those animals. We can see this behavior on birds, fishes, insects and in other different species.

The humans have these behaviors in some moments. On a riot we know where the group will encounter but never where the crowd will go. People acts more unconscious when belonging to a group, and they could do things that they would never do alone. If someone throws a rock on a bank, the crowd will start to destroy this bank acting more violent even if most of these persons are calm and easygoing. One the COVID pandemic we have a movement to buy some important things to prevent like alcohol, masks and pills, but we also had some unconscious herd behaviors, you can search the internet and you will find videos from people fighting in an Australian supermarket for toilet paper.

On the financial world, we have some of this movements also. This can result in what is called a “bubble”, a crazy buying movement that skyrockets the price and goes down with the same speed and can make people rich and lose everything in a short period of time. The most famous case is the Tulip Mania in 17th century, where the prices of this tulip market went up and down very intense. People follow others assuming that they made a good research and that it is a good investment.

So how we can use the knowledge of this behavior help our trading strategies on crypto. This is not investment advice is just information on how we can better understand the market, because we never know exactly when a bubble is happening. We should divide our trading on what is hype and what has arguments to be a good investment. With the hype money follow the trends one, go for the short term, use a short stop order trying to lose de minimum and if you make 10x consider sell everything in the first movement that indicates it is going to start to fall. With your other money look for coins that has a good potential to be used widely on the future, that is trying to fix the problems that we have on the crypto market, crypto with strong fundamentals. With this strategy you can get the best of the two worlds of the aggressive and conservative traders. The key thing is how you divide these two kinds of moneys, the risk management is the great art we have to master. But doing it right you will not suffer from FOMO because you can surf the wave, even if it is not all your money, and still be confident with your long-term investments on the cryptos you know that is the right bet for the future.

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