The Defi Edge is a famous analyst in the Twitter currency circle. This time, we are going to bring you a few common pitfalls in the currency circle shared by the Defi Edge, so that newbies or investors who are not so close to the market can pay attention to them.
Trap 1: Temperature Effect
The constant repetition of the same opinion makes people think that the relevant opinion is the whole truth, further reinforcing the established position, and eventually causing people to gradually lose sight of the content of the opposite opinion. Retail investors generally do not have enough knowledge about the currency market, so they like to follow KOLs and often hear how great a certain coin is or what price it will rise to. But in fact, many KOLs are just paid to do their job.
Pitfall 2: Dependence on Indicators or Models
In 2021, many retail traders believed too much in the stock-to-flow model, and eventually Bitcoin failed to reach 100,000 by the end of the year, and retail traders were overly optimistic about the market, which ultimately led to a loss of hands and feet. No indicator is accurate every time because future events are not based on the past. Indicators can only be used as a reference tool, while investment or speculative strategies should be well thought out before proceeding.
Trap 3: The Ducker Effect
The more you know, the more you think you know: anyone can make money in a bull market, so those who make money think they are geniuses and start leveraging. In fact, when you start to make a lot of money, you should slowly take profits and leave the market, because usually those who are prepared to do so enter the market in a bear market.
Trap 4: Authoritarian Prejudice
The tendency to trust authority figures and follow their instructions is generally a good practice, but it can be a problem if you blindly follow others without critical thinking.
In fact .......
People make mistakes, even veterans of the currency circuit.
Some of the KOLs will take advantage of people picking up and leaving.
You never know when KOLs buy or sell or the motivation behind their trades.