What is FUD? How to overcome the FUD effect in trading

Those who participate in the Crypto market are no stranger to the FUD psychological effect. However, for newcomers, this is a relatively unfamiliar term. So what is FUD and how to overcome this psychology in trading? If you don’t fully understand this concept, the following article will help you answer your questions about FUD. Let’s follow along!

What is FUD? Who is causing the FUD?

FUD is the abbreviation of the first three letters of: Fear – Uncertainty – Doubt, meaning fear, uncertainty and doubt respectively. These sentiments often give investors a feeling of worry, anxiety, and insecurity.

In the fields of politics, business… FUD is a tactic of spreading fake, unverified information to influence readers’ perception, creating false information. Nowadays, fake news is present all over social networks, released for the purpose of market manipulation.

People who cause FUD are often organizations and individuals, also known as KOLs. They are influential people in the crypto market, using this effect to serve their own interests. People who cause FUD often have teams to spread fake news to the community to profit from it.

Organizations or individuals causing FUD will control or have great influence on major media channels. Use your influence to influence as many traders as possible. There are also a number of investors and financial consultants who also contribute to this process by predicting Coin prices, they are called FUDers.

How is FUD used for fraud?

When users are intentionally exposed to FUD news, it puts you in a psychologically unstable period that leads to wrong actions such as unplanned buying and selling. FUD creators will then take the opposite action of aggressively buying or selling their coins.

This will cause newcomers to “swing to the top” right from the moment they enter the market. This case is often encountered in unknown projects or project construction teams for profit purposes rather than potential value.

A specific example: When Bitcoin came to life, the cryptocurrency market also started to heat up. Every day, traders witness many cryptocurrencies skyrocketing in price within just a few days, or even just a few hours. Information is quickly spread on social networks such as Facebook, Telegram, twitter,… causing many people to buy out of fear of missing out on opportunities (FOMO).

With such a context, just push a few fake information and the market will quickly stir up. As a result, prices skyrocketed, not only KOLs, industry leaders also tried to create a FUD psychological effect in the community.

Fear is also the most dominant psychological factor in the market. These organizations and individuals will apply the FUD psychological syndrome in a sophisticated way. They will invite victims to seminars, drawing up new technologies or investment channels. Then find a way for “decoys” to compete with each other to buy goods, entice people to buy and then push up the price of that coin.

What are the symptoms of FUD syndrome?

Some individuals or organizations will spend money to hire famous people with influence in the community to create advertising content to attract investors. This especially happens in the cryptocurrency market and also explains the shill coin phenomenon.

Let’s see if we are on the list of people who are often influenced by FUD in our trading decisions. Usually, people who often suffer from FUD are new people with little experience and have the following signs:

• Often impatient when trading.
• There is no specific trading plan before entering the order.
• Often participates in groups that update news but does not identify official news sources.
• Easily influenced by psychology due to weak analytical techniques.

How to overcome FUD mentality when investing

FUD is a common syndrome among new traders who do not have much experience in the market. Therefore, to avoid making mistakes and becoming easy prey to be taken advantage of in the market, you need to clearly understand the following principles:

Persistence in long-term development goals

Consistency in investment transactions is one of the important factors for success in this market. However, not everyone understands this clearly, or knows it but has difficulty implementing it.

Determination and steadfast will are the core factors that determine the success or failure of investors. Consistency will help you distinguish between right and wrong and patiently follow the pre-planned plan, avoiding making decision-making errors beyond your control.

Market understanding

Besides understanding what FUD is, understanding the market also helps you keep your mind. However, understanding the market is one of the most difficult principles to adhere to. Because even experienced investors do not dare to assert their level of market knowledge.

However, for someone who has just entered the market, you need to understand that no matter what market there are many opportunities to invest. Once you see a coin or other trading asset increasing in price too much, it’s best to stay out of the “game” and look for other, safer opportunities.

Know how to cut losses at the right time

You need to set a stop loss point, entry point, sell point… before trading. Investors consider cutting losses an immutable principle. If you have suffered from FOMO (the psychological effect of fear of missing out on opportunities) and have “hit the top”, don’t hesitate to cut your losses. This will at least help you keep some capital for yourself to find other opportunities.

Reasonable capital management

Allocating and knowing how to manage capital effectively will help you minimize the risks caused by FUD. In addition, good capital management also helps you maintain a stable profit while FUD can no longer affect your trading psychology.

Determine your investment style

Investment style is the opinions and trading habits that occur regularly in your transactions. Having a consistent investing style is better than having no style at all.

Determining your investment style includes short-term, medium-term or long-term trading to determine how to make decisions when affected by FUD. Assuming you belong to the short-term surfing style, acting on FOMO waves will help you achieve quick profits. On the contrary, for medium or long-term style, FUD will bring negative consequences.

So through the above article, we have completely analyzed what FUD is as well as understand what shill is in trade coin investment. This is a psychological syndrome often encountered in financial investment. Hopefully you will be the wisest investors, able to find the best opportunities.