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Here is the main thing I've come to understand...
Risk is absolutely everywhere
Its both a mechanism of valuation and a crucial statistical parameter. The concept not only applies to investments which is the subject that initially inspired this post, but also to almost everything else in life. What I find fascinating about this reflection is that the absence of risk does not exist, it's a fallacy or to be more accurate a logical misconception.
To think that we can completely eliminate risk from a situation is to ignore all the possible outcomes. Even sitting down to write this post has a certain level of risk, not much I will grant you that, but something negative could happen. I could anger someone who would retaliate, a jolt of electricity could destroy my computer (I do live in florida after all), a part of plane could land on my roof, etc... although all these events are highly improbable but, they are not effectively impossible.
Risk therefore is unavoidable and as such, its necessary for anything to exist. But this is not a vote for the campaign of negativity or an invitation for a lack of action, its just an observation. Accepting it and embracing it, is choosing to live within the parameters of reality and that is always a powerful position to take.
Learning to manage Risk
Is possibly the most difficult thing I’ve been trying to master my whole life. Why? Simply because like all other humans who participate of this earth, I too fear outcomes. This is not to say I can't look at things and be logical about them, I'm simply stating that being logical is a conscious effort that I sometimes I don't acomplish.
This might be the most important rule in trading and I would be surprised if there was a successful trader who did not live by it:
“Know your exit, before you enter”
Breaking down this somewhat simple idea normally leads me to overthinking things a little too much. If that is a good thing or a bad thing is somewhat subjective, but for the purpose of this post, It will be enough to say that most of us can’t or won’t follow the wise factualism contained in this one sentence.
Being comfortable with Risk
Should be our ultimate goal, not only when it comes to investments in cryptocurrencies, but all other aspects in our life as well. In my opinion the first thing we need to do is come to grips with all the emotions involved when attempting to asses risk, without allowing a lack of balance and perspective to rob us of positive possibilities.
I fall short of calling the word "fear" my nemesis, but only because being fanatical about this subject might work against my purpose. As someone who has won and lost in numbers that might scare a few and intimidate others, I can say that the word fear carries a different meaning than it used to in my life.
The Fear of Loss.- is somewhat combatible, at least for me, at least right now. Just a few days ago I wrote down some thoughts on the possibility of Steem failing, of our virtual experiment coming to a stop. Not to rehash what I wrote, but as they say the TLDR version could be summed up as "We are all going to live".
The hope of Gain.- Known by its more familiar acronym as FOMO is the one that still manages to drop kick me in the jaw once or twice a month. Taking in a risk, because you fear missing out on the gains or the experience is a fast track to disappointment.
What's next?
I'm not sure, but recognizing my weaknesses is sure to be the correct beginning, the healthy path forward. I happen to agree now more than ever with a little nugget of wisdom @scaredycatguide shares quite often on his mspwaves radio show: "Know your risk level tolerance!"
Today, the markets are red, many a freaking out and I'm actually completely fine. I wonder if this is it, if I finally learned "the lesson". Speaking of lessons... Are you buying something on this dip? Are you staying on the sidelines?
Other posts by yours truly
• For new Steem users - tip 2
• My mother in her special paradise....
• For the new Steem users - Tip 1
• Hello human slave
• Songwriter Shop Talk Featuring - @breakoutthecrazy