Bitcoin Forum

these days it is pretty easy to see who has been investing in bitcoin and also altcoins irrationally and based on their emotions instead of based on their solid logical analysis.

the irrational investors never make correct decisions, they always act irrationally. buying on ATH, selling at the bottom when it is already too late,...

and of course the biggest mistake of all times: they invest more than they can afford to lose.
i always tell people that you should think tomorrow you wake up to see your bitcoins vanished. not just price down to zero but your wallet disappearing. for example a fire in your house and your paper wallet burning. or simply the exchange you were using scams you and runs away with all your money!

Are you an irrational investor? what do you do to avoid being one?

I've seen a lot of my friend, who never even had any interest in crypto, make the most stupid decisions regarding what to buy and when to buy.
There's no point in trying to give them advice because they all think they're professional traders, but in reality their investment behavior is pretty irrational, I'd say.

I think that if you've been a part of the Bitcoin community for at least a couple of years, you just know when it's time to buy and when it's time to sell.
Most of us buy into Bitcoin little by little, at least I hope so, and would not invest so much that it becomes a risk when bitcoin suddenly drops.

there is no completely rational investors, otherwise we would all be computers, but the computer has not yet learned how to predict price movements exactly like people. Anyway, risks will always be. Another question is how to avoid them? Maybe has a good strategy and every day learn something new about investing. Create algorithm based on your own experience and constantly edit it until you get the result you want. And yes I am irrational investor but I am trying to be more rational

Every time I see this advice I want to change it slightly. You shouldn't just afford losing this money, you shouldn't regret about such loses.  For example if you are having around 100k USD that you want to invest but you are too greedy to buy a but ticket (I know such people) then posessing a crypto coins may cause a heart attack to you (or your greed will simply make you to perform some irrational moves that will bring you big loses).
The one irrational thing that I want to point out is buying against trend. Most of crypto traders have no theoretical background when they came into trading and I believed that about 90% of them have learned this lesson by getting big loses.  Especially in the begining of trading people usually think that if that particular coin had like -50% for the next week then it will definetely turn back if they buy it right now (no, it won't). After getting some experience they are understanding that this king of behaviour is irrational.

By avoiding being an irrational investor do you not cease to be one? The thing that I do which I find helps a lot is that even when trading on a very short-term basis I still always take a step back before making a decision to think it through and ensure I can justify it. I miss many opportunities like this but I also spare myself from making many mistakes.

I think the activities of irrational investors do affect the cryptocurrencies market because those that are selling this time are the reason why bitcoin is falling in price.
The real investors buying bitcoin at the accumulations time and sell at the retail price why the irrational traders buy at the retail price and sell out of panic during corrections.

I don't think this is been an irrational investors because shits can happen anytime to anyone. This is cryptocurrency, you might make a perfect plan on how to embark on it but along the line, anything can happen. This is why it is most time been referred to as a risky investment or busines and it is you should have a back up plan or plan B. But the mistake I won't make is to 'sell at the bottom when it is already too late, and invest more than I can afford to lose.'

Not only these days, it has always been like that. People like to invest when they see something is growing and becoming big(fomo) and making irrational decisions when their investment start falling. Solution - don't buy on ATH. Don't buy on pumps.
Have you ever heard of trezor wallet? It solves both problems.

Best way to stop yourself from being an irrational investors here is my pretty simple list of tips:
1. NEVER EVER Trade because you got an intuition or a dream regarding any coin.
2. Never catch a train which has already departed. People generally buy coins which are 10% up in a hope that the trend will continue. You might be successful at times but probability of that is quite low.
3. Always buy in correction times. While a coin is dumping and a correction is going on its not only advisable not to sell but you should even try to buy more but yes wait until you see the coin has settled don't buy while its on decreasing trend.
4. Never blindly trust signals. Take advice from them do your own research and then follow them
5. Never ever do pump and dump they are for whales you will be ruined.

Irrational behaviour has been a big part of the cryptocurrency market over the past few months, especially after the 'invesment craze' took the market by storm and suddenly the dumb money began to pump every single coin out there, this and 'Social Proof' were the catalyst that started the current irrational state of the cryptocurrency market.


Personally, rather than giving in to FOMO, hype, euphoria, that will lead me to have some unrealistic expectations from X or Y cryptocurrecy, I try to stay away from cognitive biases while I also try to be less emotional by taking a more logical approach when dealing with cryptocurrencies, this and some research will help me be aware so I don't lose money.

This is redundant.

IMO everybody who doesn't follow a strict bankroll management is irrational. May 80% to 90% fall under this category and this is the main reason to fail in a long run.

I never follow anybody without having trading history and shown a good manners in trading.

Most people who are trading don't even understand how bankroil management works. True that they have all these fancy trackers and excel sheets prepared for their trading activities but most of them don't follow it strictly and placed it there for the sake of tracking their profits alone and not including their initial investments and whatnot. It's a shame, you get a huge profit but you don't know how to control it once you lose a significant amount.


Neither do I. I tend to read up their analyses and conclusions about the current state of the market but never blindly followed anyone and trade based on what they've said. It's still better to source the knowledge you gain and draw your own conclusions so that in the end, you have nothing to blame apart from yourself. It also leads you to learn more about trading and decision-making in general, apart from being independent in doing your trades.

I've helped a lot of friends get out of the irrational investor mode... i teach them to take split trades across 10+ trades at minimum, convert part of gains into cash until they cash out their principle, showing the information on past crises, and get their longterm coins into hardware wallets so its hard to make quick rash decisions.... it's worked quite well to make them rational.

Often, new entrants to the market invest only in a single coin and wait for it to rise, and sometimes they invest all their money into a coin, which is no different than gambling. So I often advise them to allocate funds appropriately and always have a reserve money in case the market goes down. Investigate carefully before investing is always advisable in any case.

I can't lie, I used to be one when I started up in the market. I made most of the mistakes you mentioned, and I was only taught by a mean cruel teacher called experience!

I try to advise people in these forums, not to repeat my mistakes and I hope some of them will listen, but as you know most of us humans only listen to that cruel teacher!  ;D

true, but these days it becomes much easier to spot them. and also it is like a test that anybody can use on themselves to see if they are real traders or they are just gambling.

i was just giving an example of a possible risk and there are lots of ways to solve the problem.
also Trezor can also burn in a fire.