Well, it starts with a tweet, or a YouTube/ TikTok clip, or potentially your friend swearing that a certain coin is about to blow up. But for a lot of people, that little spike of curiosity turns into excitement, which turns into urgency, which ends in… a really regrettable buy. Honestly, this example alone is one of the biggest investing mistakes out there. But yeah, welcome to the emotional rollercoaster of investing, where feelings often run the show and your money pays the price.
Okay, but what’s the problem here? Well, most people think they’re being rational. In fact, a lot of people swear they did “research” (which is usually just watching some TikToks or reading a Reddit thread) and believe they’re making a smart move. But no, usually it’s not a smart move. Usually, emotional investing rarely announces itself. It pretty much disguises itself as intuition or confidence or “I just have a feeling.” Sometimes, those gut feelings are wrong, just like in gambling.
There’s the FOMO Effect
It’s best to just start with this one, since this is usually the biggest one of them all. But the fear of missing out has wrecked more portfolios than bad projects ever could. Prices start rising, people pile in, social media lights up, and it feels like the last train is leaving the station. So, you jump in without a plan, hoping to ride the wave. Nowadays, especially with so many social media trends out there (or at least people trying to push a trend), this does seem to be a thing.
But that initial high is addictive. It feels like you’ve finally cracked it. But the market doesn’t run on feelings. So by the time retail investors hear the noise, big wallets have often already made their exit. And when the price inevitably dips? That excitement turns into panic. This is constantly happening, be it stocks, crypto, you name it. But that panic leads to…
Panic Selling
So the chart turns red. You watch the value drop minute by minute, stomach churning. It starts to feel personal, like the market is punishing you specifically. Even if the project is solid and the fundamentals haven’t changed, the fear takes over. You hit sell.
But then the price stabilizes. Sometimes it even climbs again. But you’re already out, licking your wounds and blaming yourself. For the most part, panic selling is rarely about the asset itself. It’s about emotional exhaustion (but there is that defeat of the profit you could have made).
The Illusion of Safety in the Herd
For the most part, there’s comfort in numbers. If everyone else is buying, it must be smart, right? Well, except the herd usually moves too late. That’s where so many people get it wrong, so by the time the average investor piles into something en masse, the price has already spiked and the real gains are gone. Buying at the top because “everyone’s doing it” is not a strategy. It’s crowd psychology in action.
But it works the same way on the flip side, too. When people are panic-selling en masse, the pressure to follow is strong. But the herd isn’t thinking long term, meaning that it’s reacting, and most of the time, it’s reacting badly.
Feelings Make Awful Financial Advisors
You know, feelings, gut feelings, or whatever you want to call them, are bad when gambling, right? While investing and gambling aren’t inherently the same, you are risking the loss of money with both. Simply put, your emotions aren’t trying to help you get rich. They’re trying to keep you safe, and in investing, that survival instinct often misfires. Basically, the same gut reaction that told your ancestors to run from lions now tells you to sell at a loss because your chart looks scary.
So that emotion-led investing doesn’t just mess with your decisions, it does affect your timing, your risk tolerance, and even how you absorb information. That heightened emotional state means that you’ll become more susceptible to hype and more dismissive of actual data.
But what does Real Research Look Like?
Well, for starters, TikTok videos and Reddit isn’t exactly real research, maybe, just maybe there is insightful info, but you should take everything with a grain of salt, or maybe a whole bag of it. Instead, you’re far better off looking into tools to help you. For example, if you’re investing in blockchain-based assets, one of the smartest moves you can make is to use a block explorer. Since it lets you check what’s actually happening on-chain.
Who’s buying? Who’s selling? Is there real activity or just noise? This is just an example of course, but you need to stop relying on influencers and random charts and start seeing the receipts. If something’s being pumped but there’s barely any wallet activity, that tells you everything. It grounds you in facts instead of vibes. It’s no different for stocks either of course.
Slow Money is Still Smart Money
No, stop thinking “too the moon”, it’s just not going to happen, especially if you’re riding on some hype. Seriously, not every big win comes from moving fast. In fact, most consistent investors play the long game. They don’t care about timing every pump. They’re focused on patterns, sustainability, and how the asset fits into their broader goals. That kind of thinking takes discipline, and it takes putting feelings in the back seat.
You don’t need to react to every tweet or trend. You don’t have to know about every altcoin with a dog mascot. Seriously, slow, steady investing isn’t boring.
Just Keep a Journal
Don’t only focus on your wallet, ideally, you need to track your trades and write down why you made them. Were you calm? Did you follow a plan? Did you jump in because someone on Reddit said it was the next big thing?
Yes, you should ask yourself these questions because over time, this helps you spot patterns in your own behavior. It gives you data about you, which is just as valuable as any market chart. It also helps you separate smart decisions from lucky guesses.
Know what You’re Actually Buying
It sounds obvious, but a shocking number of investors have no clue what their coins or stocks even do. They just like the logo or heard someone say it’s the future. Would you buy a company’s stock without knowing what they sell? Well, it’s the same for coins too.
