Fear and Greed For all their technological sophistication, markets are driven by these primal human emotions. Great opportunities present when the market becomes irrational due to an abundance of fear or greed. This frequently occurs following major price movements or dramatic news.
At such times, weaker traders are overwhelmed by emotion and misprice their trades. Some traders will support whichever direction favours their pocketbook as if cheering their favourite sport team. And the media and public figures can be just as irrational. Complete phase of the greed and fear cycle.
Note the strong correlation to past Bitcoin price bubbles. Smart investors build long positions when price is flat and public interest is low during the stealth phase. Traders thus attempt to profit from every phase of the cycle; a lot harder but also far more profitable if achieved.
Money Management Perhaps the most important element of trading is capital preservation. Before undertaking to trade Bitcoin, consider how much money you can afford to lose before your current lifestyle becomes unaffordable. Never commit any more than this sum to your trading account. If your trading is successful, the size of each trade in absolute terms steadily grows as your trading account swells.
If unsuccessful, at least losses are kept to a minimum, which allows time to adjust your trading plan.