My first crypto lesson: the allure of 'just a little more'
Thought I'd finally dip my toes into crypto a few years back, riding the tail end of a $BTC surge. Everything looked like it was going to the moon, obviously. My mistake wasn't just buying near the top, which was painful enough, but rather the slow creep of adding 'just a little more' on every dip, convincing myself it was a genius move to average down. Turned out I was just averaging into a bigger hole, ignoring my own pre-set risk limits in favor of pure, unadulterated FOMO. The market, as it often does, reminded me who was boss, swiftly liquidating a substantial chunk of my portfolio. It was a harsh but effective lesson in sticking to your guns and understanding that 'averaging down' can quickly become 'doubling down on a bad idea' if conviction isn't backed by solid analysis, not just hope.
Yeah, that's a classic trap. Averaging down only works if the asset eventually recovers, otherwise you're just throwing good money after bad. Stick to your initial thesis or cut your losses.