The digital economy has been constantly increasing lately, with its exposure being unmatched which comes along with life-changing opportunities and global adoption. There is no doubt that cryptocurrencies and blockchain technology are relevant concepts in the new economy.
One of the main reasons cryptocurrency has been the talk of the town was fueled by Bitcoin. This first cryptocurrency was successfully implemented on a peer-to-peer network designed to serve as a decentralized payment method with no hassle, fewer fees, and no third-party conflicts like traditional banks.
Cryptocurrency trading has been one of the best features of the rise of the new economy. The trading market is one of the playing fields of the best traders, minds, strategies, and companies that battle head-to-head to predict which direction the market will go.
Trading has come a long way even before cryptocurrency has allowed such features, with traditional assets such as stocks and commodities trading running over the open market for centuries. The addition of this new asset class in the market has allowed for a whole different playing field for traders to adapt and learn.
Cryptocurrency trading can be intimidating at first, but it shouldn’t stop you from jumping on the opportunity to join in on the action. Trading is all about risk management, understanding how the market works, and learning from your mistakes. It all starts with getting your feet wet by studying, finding reliable sources of information, setting up a trading account, and diving right into the market with a strategy in hand.
Human Behavior vs The Open Market
Even though risk management, market structure, and trading strategies have always been present as resources, people still find a way to let their emotions run over their trading decisions and not follow their original set-up due to different negative factors such as greed, FOMO (Fear of Missing out), poor judgment, lack of trading experience, and even their own pride to not accept the loss even when their market position is already against the trend. Many traders still lose money over irrational decisions and overconfidence.
People’s behavior, when they are doing financial activities, is very closely connected to the market dynamics that are happening. Even though there are a lot of theories and studies about why people do the things they do with money, we still don’t have a lot of proof from real life about what people actually do.
As Nobel laureate Eugene Fama proposed, a market is efficient if market prices reflect all relevant information about the underlying assets. In this scenario, the market price is always aligned with the fundamental value. If news impacts the fundamentals, prices adjust immediately to reflect the new information. For example, if you’re thinking of how Elon Musk influenced DogeCoin prices whenever he tweets about it, you would understand what I am pertaining to.
The Life Cycle of a Price Trend
A price trend follows three common stages throughout its journey. For this example, we will observe investors who only react to news (news watchers) and those whose trades follow past price changes (momentum traders).
In the first stage, When a piece of good news gradually spreads in a group of people who watch the news, they start buying in on the positive events. The asset now has a higher fundamental value, which means the asset now has the potential to generate more future income.
The news watchers are value investors trying to profit from the difference between the new fundamental value and the current trading price. The price doesn’t change much at first because the people involved misjudge the situation, but it gradually increases to match the new information. This kind of reaction can be chalked up to human nature and we’ll get more into that later on.
In stage 2, investors see the gradual positive trend and buy into it, which raises the momentum. Since more traders with a herd mentality join in, the price service goes above what the asset is actually worth leading to a delayed negative reaction.
In the third stage, The market usually overreacts to news, causing the price to increase or decrease beyond the fundamental value. However, eventually, the market will realize this mistake and over-speculation, thus a market correction will converge back to the asset’s true value. If the momentum is strong, a speculative bubble may form, and prices would plunge afterward.
Now that we have discussed the life cycle of assets in the open market, let us dig deeper into the types of behavioral biases each trader would encounter at least once in his trading journey.
Even though the market is not perfect, some strategies still manage to make a profit in the financial markets. Though these methods are lucrative, they remain difficult to accomplish.
Human beings always tend to seek quick profits as much as possible. Although it would be nice to consider ourselves rational, studies on behavioral finance show otherwise. We sometimes think we know more than we do and let our feelings get in the way of good decision-making.
A common mistake among investors is selling winning investments too soon and holding losing investments for too long. The “disposition effect” is the name for the occurrence of prices initially underreacting before price momentum begins. Here are some more examples of the ways that different types of traders can be impacted by cognitive biases.
1. Fear of Missing Out
The psychology of delayed overreaction is elaborated upon here regarding momentum stories. When an asset price is on a strong uptrend, everyone rushes to get involved, and the frenzy drives the price even higher. The herd-like behavior is motivated by the ‘Fear of Missing Out (FOMO). Investors are afraid of losing out on profitable opportunities, so they buy into trends without any basis.
Such a mentality is found not only in retail and amateur investors but professional institutional investors like mutual funds as well. They are afraid that if they do not join the mainstream their portfolio performances will fall short of everyone else’s returns.
2. Confirmatory Bias
People tend to develop a belief first, and then they look for information that supports their idea. This is why individuals might sometimes mistake recent price movements as indications of future behavior.
Confirmatory bias investors buy more tokens that have recently made money and sell the ones not doing well. Such behavior can be self-fulfilling and help grow price momentum. Another example of this is people who think Dogecoin (DOGE) will do great tend to read articles with similar opinions which then reaffirm their original thoughts.
3. Anchoring Effect
The anchoring bias is when people refer to past information and don’t change their opinion enough in light of new evidence. It’s a possible explanation for why investors might not sell right away after seeing good news.
This is why we have created Phoenixed. Phoenixed makes trading and investments easier by providing automated trading bot services. Not only does our platform help traders automate their strategies, but our Discord community also provides a supportive and experienced environment for anyone new to cryptocurrency.
What is Phoenixed?
Phoenixed is a bot designed to take the ‘human’ out of trading, and automate every step of trading, even while asleep. Phoenixed is bridging the gap between chart tools like Tradingview (can be any other) and cryptocurrency exchanges like Bybit. Automation won’t suffer from human emotions and tedious market monitoring. Phoenixed is your personal trading assistant anywhere you go. Go with Phoenixed.io if you want to trade like an expert, even while you are asleep, or spending time with your friends & family.
Phoenixed includes advanced features such as social trading, various laddering, and mirror trading, one-to-many automated signal sharing, indicator and strategy automation, and a vast array of risk management tools. Our company is founded by a group of experienced traders, analysts, and developers operating around the globe with a particular interest in security and algorithmic trading.
Phoenixed is built with a team of 10 experienced members with different valuable professions, the team teamed up with the goal to come up with a product that helps the user with their trades and makes them less emotionally involved. We believe that there is no other viable option if you have these specific needs. Our goal as a team is to make trading profitable for everyone involved.
Phoenixed is a cutting-edge crypto trading platform that allows users to automate their trading strategies. With Phoenixed, you can trade cryptocurrencies like Bitcoin, Ethereum, Ripple, and more with ease. With your input and our 24/7 market monitoring, we will place buy and sell orders according to your trading strategy or signaller. It computes the market for the best prices to maximize profits.
Thanks to Phoenixed you can now automate all the time-consuming aspects of crypto trading. It analyzes the price movements of your selected coins 24/7 to execute the best trades without making you lose sleep over them.
Why Choose Phoenixed?
Because the cryptocurrency market is a 24/7 market, Phoenixed bots are truly relevant and built for the current trading industry. It would be impossible for any trader to constantly monitor the changes in value and conditions around the clock, so Phoenixed has become essential to make trades while profitable conditions exist.
While new traders may assume that crypto trading bots can only be used by an experienced trader who knows the ins and outs of the market. Phoenixed can be a significant tool for beginners to effectively start investing in cryptocurrencies, due to its optimized UI and beginner-friendly registration and linking procedures.
Phoenixed is the best choice when it comes to automated trading bots because the team has piled up over 30 years of experience in the trading industry, from huge losses to life-changing profits, all written in their code. Strategies integrated within the application are carefully backtested and low-risk which will maximize your returns!
How To Trade With Friends
Phoenixed also has a very exclusive community feature called the Phoenixed Firepit. It is a closed invite-only trading group where you can converse with different traders and brainstorm insights and experiences to provide the best feedback possible not just with automated trading bots, but also notes from the passionate community!
There is also a sensei feature where you can hand-pick your own group members and allow them to have the exclusivity of copy trading, insights, and ideas without others knowing about it. This is how to trade cryptocurrency with friends in a more private setting.
How do you get started with Phoenixed?
Phoenixed is very easy to use, with only 5 minutes of registration, and you can also start with as little as $1 in your account to experience the innovative solution to your trading experiences! You can also use the demo trading if you do not wish to put funds on the line.
Below are the steps on how to start your Phoenixed experience:
Step 1: Verify your legal rules and regulations
Step one for this to-do list is making sure you follow your local rules and regulations. Asset trading can be unstable, so your assets are always at risk. If you’re ever unsure, ask your financial advisor for more information.
Step 2: Create a TradingView account
This may be subjective as most retail and institutional traders have already encountered using TradingView as their application of choice when it comes to reading trends. But if you haven’t used TradingView yet, it would definitely be a big advantage if you wish to pursue your Phoenixed journey. Sign up on TradingView here
Step 3: Create a Trading Account
How can you trade without a trading account to manage and place funds to? The best exchanges that can offer you the best UI and interfaces that are easy to use are Bybit and Binance as they are the world’s fastest-growing cryptocurrency exchange and trading platforms. But as of the moment, Phoenixed needs Bybit to place and execute trades on your behalf. To create a new account, click here. If you already have an account, then you can skip this step.
The ‘Phoenixed connect to Bybit’ feature is one of the most helpful and time-saving features that the application offers. It would only take a few moments for your Bybit account to be successfully linked to Phoenixed.
Step 4: Create your Phoenixed Account
Phoenixed offers different membership tiers that come with exclusive access to events, services, and content. Learn more about the various memberships available on our membership page right here. Some free memberships are also accessible with limited features.
Step 5: Time to Connect
The final step is to connect all of the systems together. Create Bybit’s API keys and import them into Phoenixed, then create your first signal or follow one of our proven Senseis. You’re now ready to automate your Wealth!
Humans are bound to make mistakes, and that is one of the reasons why many traders lose money. Phoenixed was made to take away the emotions often associated with trading. Whether you are interested in bot trading, copy trading, or social trading, Phoenixed is the solution for you!
Phoenixed crypto automation has a wide range of features and integrations, which is the perfect choice for both beginners and experienced traders alike. So what are you waiting for? Sign up today and start your Phoenixed journey!