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We suggest that you familiarize yourself with the psycho-types of behavior in the cryptocurrency market and identify your trading nature. Different types of trader characteristics are found within the cryptocurrency market trade. In this article, I have succeeded to identify them by the behaviour of some animal icons. It will especially help the reader to know the various characteristics in the market, but especially to understand oneself as an active trade or prospect—are you a bull or a bear, or maybe an ostrich or a flea dog?
What it does: Butt horns from bottom to top.
Feature: The bull is one of the two main participants in the stock and cryptocurrency markets. This pseudonym for gamblers appeared in the early 18th century, when financial institutions began to gain their popularity. The Bull became the protagonist of a series of satirical stories of the doctor and author John Arbethnote's The History of John Bull, where Bull is from the English “Bull,” a collective image of a well-fed, undersized Englishman, who is the antipode of the American image of tall, thin, uncle Sam.
The player of this type in the stock and cryptocurrency markets always hopes for the best—assets purchased at a low price will increase in value. In the case of digital coins, the trader buys only the currency that has appeared and believes that it is fixed at leading positions, or invested in Bitcoin, broadcast, lightcoin and other popular cryptocurrencies at the time of their decline, and also believes that the market will roll back soon positions.
It turns out that when buying coins, bulls open a long position. This transaction can last an unlimited amount of time. If the value of the coin increases, closing the position will bring profits to the bulls. Most market players represent this category of cryptocurrency traders.
What it does: Beats paw from top to bottom.
Feature: Another major type in cryptocurrency (and not only) trading is considered to be a bear. Bear traders are the opposite of bulls who sells their assets with the hope that their price will decline in the future. That is, the bearish task is the rule—“sell at a higher price, buy at a lower price”. After the sale, which usually occurs in the general mass trend, the price of crypto assets falls, demand decreases.
The bears, concluding a contract for the sale of an exchange asset, fix its price and wait for the goods to fall in price, close the deal and put the proceeds in their pockets. They win on what they do not have. All stocks and tokens in this type of trading are taken on bail. After analyzing the market and understanding that the trend will soon be falling, and recently it is just that, the bear takes assets (for example, 100 pieces) from the cryptocurrency exchange for $1. After some time, when the exchange rate really falls, the bear returns the stock at the current price with a small commission. It turns out that a hundred pieces of coins at a cost turned, for example, into 50 assets by past performance. The remaining 50, earnings.
Experienced players who hold this position, given the sharp volatility and the constantly falling rate of Bitcoin, gets a lot. Although themselves clumsy like to assert that the cryptocurrency—the bubble, which will soon repeat the history of the dot-com.
What it does: Holds a lot of cryptocurrency.
Feature: Whales are the largest holders of cryptocurrency. As a rule, these are the market players who managed to understand the essence of cryptocurrency and enter the industry at the very beginning of the market. The whales calmly watch the bull games and bears, which are insignificant for them in scale, and do not interfere in the pursuit of hundreds of dollars in pennies. But with personal need and interest, the most significant asset holders are able to turn the market on its head.
Selling several hundred thousand bitcoins can change the trend of cryptocurrency, the entire approximate scenario with little money in circulation which will fail. Therefore, any action of the whale is regarded as a warning to global changes.
The whale can make the whole community play by its own rules; strategic approaches can astound everyone. For example, if a large asset holder knows about any significant upcoming event or simply wants to purchase even more coins, then all the whale needs to do is to place a large order for sale at a lower price than everyone else. This will force market players to succumb to the movement and reduce the cost. Panic in this case is guaranteed. Upon reaching the desired mark, the whale acquires depreciating assets and withdraws its order. This technique is called the “wall of sales.”
If the whale wants to fictitiously inflate the price of any currency, then a pumping price is applied. With this manipulation, a large order is placed with a price higher than the market; after that, other users increase the value of the asset—the goal is reached, the coin becomes expensive. And still whales can unite in dark pools and not publicly buy a huge amount of bitcoins. In general, whales are serious people.
What it does: “Slovil moose”—suffered losses.
Characteristic: Elk received its name in the Russian-language interpretation from the English word “loss.” This type of personality in the cryptocurrency market is always unlucky. Elk makes unprofitable transactions, invests in incomprehensible assets, bears permanent losses.
Traders catch a moose—lose assets, grow it and sleep with it—leave a losing position for the next trading session, after that the moose grow up and walk in herds—the trader gets several losing trades in a row. Admit that, especially at the very beginning of cryptocurrency activity, each user is a little elk.
What it does: It is afraid to buy—it will suddenly become cheaper, it does not dare to sell—it will suddenly rise in price.
Characteristic: The most fearful and indecisive cryptocurrency traders are called sheep. If you make up a hypothetical collective image, then this type can be represented as a young man who “knows something, heard somewhere,” but is afraid to do wrong, therefore, follows the crowd. A trader-sheep can closely monitor the course of currencies all day, analyze the situation, understand some tendencies, but he will not decide on any actions and manipulations.
If the sheep will buy assets, they can turn into bulls, and if they sell they turn into bears. With strong fluctuations (read: almost always), this type of trader loses its investment, it remains with nothing. After that, a sheep trader with huge disappointments and an even greater void in the wallet comes out of the cryptocurrency market and advises everyone not to go into this “bubble that will soon burst”.
Type: Lemming (Hamster)
What it does: “I invested $100 when my asset goes up to $100,000,000? Why not tomorrow? ”
Characteristic: Hamster traders are often referred to as sheep traders, as these characters are very similar and have common features in the behavior on the exchange. Both animals easily turn into bulls and bears, adapt to the general trend, act according to the rule “as everyone, so do I, because everything will not do badly.” But if the sheep after failures leave the market, the hamsters continue to mindlessly convert Fiat into cryptocurrency and wait for the rapid growth of their investments.
This is not to say that these people have more money and less opportunity to analyze the market, hamsters are simply intoxicated with the idea of earning more and faster. For them, cryptocurrency is not a promising asset, which in the future, with the right analytical approach, can bring X to the starting capital. And even more so, digital coins are not regarded by hamsters as a technology of fast payments.
Lemmings in the market are most, they are subject to the effect of the herd. Due to rashness and frivolity of behavior, large market players manipulate hamsters, forcing them to invest in the necessary asset for their activities. Therefore, in order not to become a victim of whales and other rich traders, it is necessary to study technical analysis, follow the market behavior and not give in to general sentiment.
What it does: Silently analyzes the market and collects the largest income.
Description: The name of this type of trader originated from Martin Scorsese’s already iconic film, The Wolf of Wall Street, where the main role of the broker Jordan Belfort is played by Leonardo DiCaprio. There, according to the scenario, the young youth earns millions by trading on a well-known stock exchange. Get a huge salary allows concentration and constant hard work. Therefore, in the real trading life, smart and calculating players of this type are called wolves.
That wolves are the ideal to which all decent traders should strive. After all, they are famous for their constant positive result, no matter what they do, whatever position they put in—everything goes with X and a big profit. Yes, for the sake of wisdom and a clear view, one had to sit up with analytical textbooks, constantly follow the trends and learn to feel the market behavior. But then all the “lost” time is converted into income with numerous zeros.
What it does: While the bull and the bear earn, the pig goes under the knife.
Feature: Probably the offensive should be traders, who are called pigs. But they are so passionate about the idea of quickly and passively making a lot of money and going to the paradise islands, that they do not pay attention to the inconsistent nickname. Pigs are mindlessly investing in high-risk assets, do not study the market, and often trade against the trend. It is these traders that are the favorite delicacy of professional traders, because pigs hold a profitable position to the end despite all the changes in the course and cryptocurrency trends.
Pigs are the personification of greed, as they lose all their assets because of excessive expectations of a better price and too much hope in their intuitive powers. But do not confuse the pig with the holder. Traders of the first type keep a coin when it grows, when it shows a rise, and, hoping to get more. Holder just keeps the crypto asset at a low price and hopes for its growth.
What it does: It makes a lot of quick deals.
Characteristic: In nature, the hare is famous for its fast running and dexterous jumps, therefore in crypto, the adherents of speed and sharp deals are named after this particular animal. From the point of view of trading strategies, hares are engaged in scalping—a risky tactic that involves constant jumps in positions within the price corridor. Traders tirelessly open short-term deals and jump around the market from one price point to another, trying not to burn out on unfavorable assets and not be eaten by bulls and bears.
Scalping, or pip-sing, is a highly profitable method of trading, which is considered to be the top trader's skill. After all, to make quick deals, it is necessary to understand a lot of things: the instrument's trading behavior, market expectations, the basics of technical and fundamental analysis, the news and statistical background. The trader requires a high concentration and discipline. Otherwise, fast and high-quality running will not work, and the hare will be eaten.
What it does: Hides his head in the sand and does not react to events in the cryptocurrency world.
Feature: The ostrich user is the most passive and morally impenetrable beige trader. Not only is he not interested in the news policy and the constantly updated exchange rate, he also does not respond to important statements that may directly affect the value of assets.
Probably, to pay attention to the change in the price of ostriches cryptocurrency will force only the case if Bitcoin drops to $100. Of course, there are almost no such players on the market. The ostrich effect, when investors put their heads in the sand and hope to recover their positions, disappears during bearish trends under the condition of the greatest financial stress.
Type: Flea Dog
What It Does: It makes a failed deal.
Characteristic: In the lexicon of fiat traders, there is a famous quotation from Oliver Stone's film, Wall Street (1987) — “This is a flea dog, baby." That is how the stock trading shark Gordon Gekko described the unpromising shares of a young stockbroker named Bad Fox. Therefore, the dog has become a symbol of inefficient investments or assets. Consequently, traders who make mistakes in investing are called dogs.
Also in fiat trading, there is a “Dow dog” strategy, in which, at the beginning of the trading season, 10 stocks with the highest return are taken from the Dow Jones index (30 in total). Each trading season, the portfolio is adjusted according to market trends, and as a result, according to the theory. In 15 years the profit will be 13 percent. So far, this strategy is not fully applicable to cryptocurrencies, since digital assets have existed for less than 10 years. Therefore, it is now possible to assemble an investment portfolio of promising crypto-monettes and look at the X's in the future.
What it does: “Where to press, so that everything becomes real?”
Characteristic: In English literature, chicken is considered a symbol of cowardice and indecision. Therefore, too vigilant and inexperienced investors called it chickens. They are afraid to open positions, because of cowardice they never take risks. They enter the trade too late, when the bulls and bears are already closing their positions and taking profits, because for a long time they understood what was happening.
Chickens are guided by the fear of loss: they are so worried about their failures that they are simply afraid to enter the market and constantly miss moments to open a profitable position. However, this trader's type is not permanent, it is the initial, passing position of a novice trader who has not yet learned to control his emotions. A chicken differs from a sheep in its inexperience and youthfulness in trading.
The newbie eventually either turns into a stronger animal of the world of finance, or completely leaves the market.