London, UK — FUD is a short term used for “fear, uncertainty, and doubt in cryptocurrency trading.” The concept is very famous in the financial market between stocks and cryptocurrency enthusiasts. The term represents three feelings that crypto traders often experience during the time of investment and particular events. Some specific statements and events might trigger FUD in the cryptocurrency market that voice pessimism, skepticism, and a bad outlook for the future prospects of specific cryptos. The major problem with FUD is that giant whales or competitors might use it to devalue a particular project of crypto. They can achieve it through FUD by either creating a more favorable price movement for their crypto or by convincing investors against their competitors. The FUD-making statements can also prevent innovative projects from getting the proper attention they deserve. They can also amplify the negative aspects of the project. Sometimes the people giving FUD statements aim to evoke unpleasant emotions in the audience.
According to Oliver Mount, a crypto analyst at Investments Global, it is very crucial to learn how to overcome FUD in crypto trading to profit from the underlying situation. Please continue to read this article to find out more about what FUD is? How does it affect crypto trading? And how to profit from FUD in cryptocurrency trading?
FUD: A Breakdown
The emotions involved in FUD I,e fear, uncertainty, and doubt, are common emotions to deal with during the investment in any financial asset. Let us see what FUD exactly means in cryptocurrency trading.
The primary component of FUD is Fear. FUD feeling traders usually feel anxiety about their decision of investment. A person feeling FUD will be thinking about selling his investment due to prevailing pessimism about his investment. This fear can lead to rash decision-making that might end up causing loss or less profit, ending up making a person feel regret afterward.
Any person feeling uncomfortable about his investment decision or feeling worried about his portfolio can consult a financial advisor.
You can never make a sure bet in investing, and when it comes to cryptocurrency investment, there is always a high degree of market volatility. Some cryptos are less risky than others, but there is always a chance of experiencing uncertain events because of the relatively new nature of the crypto market. The uncertainty attached to investing can trouble some investors, and it is advised to diversify your portfolio to deal with such trouble.
Any new information about your assets in the portfolio can make you doubt your decision. The information can be in favor or against your investment, and it might not always be wrong. However, whenever there is something making you doubt your investment, you can always remind yourself about what made you buy this asset/crypto in the first place.
Cryptocurrency investors usually hold the asset for a long time period as they believe in the potential of the project. Some information and statements might affect the prices in the short term. But you need to assess whether the decline was temporary and has long-term effects.
FUD Effects on Crypto Trading
You might think FUD is not such a risky thing. However, it can be very dangerous than you think. The new traders could suffer a lot because of the FUD creating statements. Some even say that FUD has the potential to entirely disrupt the strategy, influence the trader’s decision, and destabilize his beliefs.
The cryptocurrency market is very much speculative. The whole market sometimes gets shaken only because of some statements made by big influencers like Elon Musk and Vitalik Buterin. People tend to follow them blindly, and if there is some statement made by them condemning cryptocurrencies or particular crypto, it could easily create a FUD in the market. Traders will blindly start selling the related cryptocurrency, eventually causing themselves loss and ending up devaluing that crypto project.
How to Overcome & Profit from FUD in Crypto Trading
It might be challenging to overcome the FUD and profit from it. However, it is not impossible, and you might follow the following ways to go against the FUD feeling and might even succeed to profit out of it.
- Conducting thorough and profound research before investing in a cryptocurrency might help you avoid the FUD. Having complete knowledge about fundamentals and technical analysis only makes an investor more confident about his decision. In this way, traders can become prepared for any FUD-creating statement in the future.
- If a crypto trader has only invested the money which he can afford to lose, he might easily overcome the coming FUD events. In this way, he will not worry about the temporary movements in the market and will keep emotions away from his decisions to make successful trades.
- The trader must keep up-to-date about his invested crypto project to notice the FUD earlier and make the appropriate decision. Sometimes fundamentals behind a crypto project might change and cause a decline in its value. Such times could be predicted if you keep yourself up-to-date about the project and avoid significant losses. Even you can also prepare yourself to buy back the dip and earn profits.
- Having the talent to determine the motive behind the FUD can also help overcome it. A close competitor can create the FUD to confuse the investors, or it could be created by a government as a threat to the whole crypto market. Sometimes FUD is falsely created intentionally to defame the project and confuse traders. In such times, having enough knowledge to determine the internal motive of FUD might help overcome the situation.
- If a trader believes in his crypto investment project, he should learn to avoid all the negative information. This might help him keep calm during the time of FUD and save him from any unexpected loss.
- On the other hand, if a trader finds it difficult to avoid pessimistic news, he can try to focus only on the positive news. The upcoming and current developments, integrations, partnerships, adoptions, and upgrades are some areas where a trader should focus at the time of the FUD. It will not only avoid the FUD but also helps strengthen your belief in the project.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.