A study by the University of California has revealed that most individual investors achieve results that are worse than standard investment benchmarks. The main reason was that they were playing into their emotions, rather than following a clear-cut strategy. In simpler words, they would avoid the unavoidable and repeat mistakes. If they entered a trade that “coincided with pleasure” they would repeat the same plan and avoid those “generated pain.”
No matter how well thought out your blueprint might be, if you don’t take into account elements such as company results or factors that may affect the stock performance, it will be problematic. The first and foremost is to identify your investment personality. It is harder to pick an appropriate investment strategy without analyzing the level or amount of money the investor is willing to lose. This is one of the many things to consider before entering the crypto market.
Investment Personality Types
Studies have categorized them into 6 types; cautious, methodical, spontaneous, individualists, emotional, and busy.
People belonging to this have a strong need for financial security and avoid high-risk ventures. They rely more on their own financial knowledge over a professional advisor. Their actions are often by fear, making it tougher for them to adopt a forward-looking approach.
The volatility of cryptocurrency might be a problem for these faint hearts but that doesn’t mean they shouldn’t go try it out. Maybe their cautious, well thought out plans might make them better planners than others.
These investors listen to their brain and make financial decisions based solely on hard facts and numbers. Keeping a rational outlook, they are screen-watchers, actively trading on price fluctuations and switching game should they spot a trend early on. Sticking to discipline and not letting emotions cloud their judgment; they are the opportunists. Their diligence makes them a good personality to dive right into the crypto market where they could really excel when it comes to short-term investment plans.
Playing it right into the hands of their feelings, these risky adventurists trust their gut feeling and take a leap of faith. They invest with their heart rather than the head, falling prey to whatever seems fashionable. With their spontaneity and courage to take risks, they do make a good type to discover their potential in the crypto market.
Trusting their own market research and experience they are much similar to our cautious brother in this aspect. But they keep an eye on investment markets as well so they can come to their own judgment. Creating a mix of their own experience with the trends of the market, they tend to do their own thing. A mind of their own, they could do well in the other not-so-mainstream ways of the crypto market. They can be as surprising as this gif, in my opinion.
They are not what their name suggests. Instead of being too busy to invests, this personality type thrives on the buzz created by the markets and trading. Scrolling through endless news of price movements, they are always in on every gossip; be it hearsay from newspapers or magazine articles. However, their constantly buzzing nature makes them bad long-term investors as they miss out by not holding for a better price. *throws shade at your bad investment*
Do you see yourself fit any type? Whether any of this rang true or was too real for you; the important information to retain is to know your investor personality and its strengths and weaknesses.