The acronym FUD stands for Fear, Uncertainty and Doubt.
When it comes to stocks and crypto, FUD is often referenced when someone is pushing “fear, uncertainty and doubt” about a given coin or company.
However, FUD isn’t based on facts. Instead, it is based on rumor, gut feelings, opinion pieces and predictions.
- “I believe that the stock price will fall next week.”
- “This cryptocurrency has no future.”
- “The price is probably going to fall even further.”
- “Hedge fund manager Joe Bloggs believes that Bitcoin will crash in the near future.”
Unless these statements are accompanied by supporting evidence, they are distractions. They are FUD.
How to deal with FUD.
When FUD sets in, traders begin to doubt their decisions. They also begin to fear that they will lose money.
“Maybe I shouldn’t have bought this stock? What if the naysayers are right and the price falls even further? What if I was wrong? The market isn’t looking so great right now. Maybe I should sell?”
The problem here is that these are all emotional questions. They are not focusing on the facts or the fundamentals.
Emotions are your enemy.
When it comes to trading or investing, emotions are your enemy. More often than not, they will lead you astray.
If feelings of fear, uncertainty and doubt start to creep in, the most important questions to ask yourself are:
- Why did I invest in this in the first place?
- Has anything actually changed since then?
- Do I still believe that this company or cryptocurrency has a future?
- Is there a factual reason why the price is likely to fall?
These questions are based on the reality of the situation. As opposed to your “instincts” or “gut feelings”.
The problem with “gut feelings” is that they can bully you into selling or convince you to hold onto something much longer than you should have.
They can be based on fear or greed.
This is why it is important to do your own DD (due diligence) and research a company before you purchase shares in it.
If you blindly buy shares because you think that the stock price might go up, FUD will set in as soon as it doesn’t.
This happens a lot when traders jump in on “trends” in the hope of making a quick profit. They buy in at a high, the price plateaus or drops, and then suddenly, feelings of fear and anxiety begin to set in.
Now they’re left holding a stock or cryptocurrency that they have no faith in. All because they saw others making profits and were afraid of missing out.
The best defense against FUD is research and a plan to hold over the long-term.
If you know the facts and you believe in the future of the company, short-term price action will be far less likely to phase you.