Hello to my friends who love life and keep smiling despite all kinds of negativity. In this article, I will talk about "Herd Behavior", which is frequently made in the cryptocurrency markets. I will try to explain it as simply as possible. Let's learn together…
In order to be successful in the markets, the person must make his own decision. However, this is still not possible. Especially according to the news known as "tip" in the market, there are many investors who invest.
In 1841, Scottish writer Charles Mackay published his book "Extraordinary Popular Delusions and the Madness of Crowds" about the irrational behavior of people acting as "Herd Behavior" in the markets. The book describes the famous speculation in history.
Herd Behavior; It is defined as investors trading in the same direction (buying or selling) in the same cryptocurrency market at the same time. If an investor makes or changes his decision based on the decisions of other investors, he is joining the herd. It is known for its devastating effect, especially in times of financial crises.
So, is herd behavior really a bad thing ? The investor has to know how to stand in or out of the crowd. If the investor is in trouble due to herd behavior, he loses a lot of money. But if he gets on the right side before everyone else, he'll make a lot of money. The investor must read the news in the market correctly and understand the market.
One feature of the cryptocurrency market is that it is suitable for Herd Behavior movements. According to the Dow Theory, the collective action explained with the "trend" approach is in a way a herd psychology. Accordingly, if market participants think things are not going well, the direction of the market is downward and it makes no sense for you to have the most profitable, solid cryptocurrency in your hands. Accordingly, the cryptocurrency is quickly affected by the developments in the market, there are mega trends, Herding Behavior is experienced and the uncertainty is huge.
In some cases, the investor thinks they have to follow a trend. They know that someone is collecting a particular cryptocurrency, but they don't know who it is. When such investors tremble a cryptocurrency, they believe that those who drive the price action know the future better than they do. Thus, investors follow the trend. Some investors wait for such a price trend before entering an investment. The occurrence of an expected price action confirms that the idea is correct and the person feels that they can open a position with confidence.
In finishing…
The investor only has to predict where the "Herd Behavior" will go. That way, he can act before anyone else and position accordingly. However, it is still difficult for a person to separate himself from the herd.
As I always said, listen to everyone, decide for yourself ...
I'm looking forward to your comments. Thanks to your comments, we can shape my next articles together. Let's stay in touch… Take care of yourself so that you and the people around you are happy…
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