I'm meeting more and more crypto traders who have done crazy things like remortgage their homes and throw their entire life savings into one type of crypto currency, Not only is this a terrible idea because of the mere fact that the words "you should never invest more than you can afford to lose" get repeated over and over again all over the internet, but once you've actually taken that step and your entire future depends on the performance of a crypto currency within a volatile market it becomes hard to accept facts.

The emotional investment you've committed alone will cloud your judgement and reasoning, every single time you see that red candlestick pop up on POLONIEX you will be punishing yourself with stress, "will this be the end?"

I've tried to discuss my practical viewpoints on certain cryptos like Ethereum to emotionally invested traders and the conversation always seems to take a different direction, speak one against their precious and you might as well put on a pair of boxing gloves and get in a ring with them.

"You only win/lose once you've sold"

Another phrase you'll here constantly on the interweb, you haven't gained or lost anything until you've sold, "but why? my portfolio says it's now worth $1000 and I only started with $300", Well let me explain this principle around ROI, you can see this in 2 different ways...

you are tired of FIAT currency and are slowly moving your entire net worth over onto Crypto Currency, you've invested in BTC and plan on only exchanging over to FIAT when you have to for certain situations where BTC is still not accepted as payment, in this situation your will start converting any investment outside of BTC into BTC, and as the value of BTC increases you gain buying power, in this case you would start to look at FIAT (e.g USD) against BTC and it will be USD which will be perceived as volatile from this viewpoint.

The second perspective is you have all your savings in FIAT, you're aim is to make enough money to pay the deposit on a house or car, in this case, you will pay for this car in USD. In this instance the intention is not to be using BTC or any other crypto as your main currency, so you will be monitoring your portfolio value converted into USD, the trouble with this is that the value of USD is dependant on so many factors that it's so easy to watch your portfolio shrink by 50% within a few hours, its important to realise the number of coins in your invested currency has not changed, it is only the value in USD which has, the currency you have chosen to be your main working currency. Anything can happen in this crypto world, the investment you have made in these cryptos only really starts profiting once you've actually made back your return on investment.

A typical example of this second situation is a discussion I've had recently with a serious crypto trader, lets call him "Fred", Fred had thrown some money into bitcoin a little while ago with an initial investment of $1500, from this initial investment he managed pull out $4000 of ROI, still managing to keep some bitcoin in hist portfolio after the exchange to USD he pocketed around $2500 profit in USD, he was extremely happy with this result.

So now Fred has re-mortgaged his home, he is "chasing the dragon" so to speak looking for that next big win/fix, his eye's are on ethereum and he won't listen to any word of reason.

source

The problem with Fred's situation is that Fred has not yet made a single penny on cryptocurrency, not even that initial $2500, in practicality Fred has just gambled away all of his winnings and more into riskier investments, if Fred re-mortgaged his house and pulled $40 000 from this, once he dumped this money into concurrency he is all together down by over $39 500, that's Fred's very first original investment of $1500 plus the mortgage value of $40 000 minus the profit made off bitcoin $2500. Fred has to withdraw/exchange $39500 from crypto currency into Fiat before he can start to make a profit. This may happen over the next few months and according to Fred it may happen within the next few weeks but it may also never happen at all. The nature of these volatile markets means that all it takes is one major slip up form Ethereum for the market to lose confidence in the crypto itself and move on to the next big thing and Fred would never see his money again.

When you are up, stay that way

The safer option for Fred would have been to pull out his original investment and trade only with his profit, reinvesting any gains to build up his trading portfolio by researching the market and taking educated guesses on good investments hoping for them to pay off, by removing his initial investment Fred has also removed his emotional investment and can trade stress free, he will be much more open to advice as the worst thing that can possible happen in this situation is a hacked account, but ultimately would have no real impact on Fred's stress levels or pocket, as the money was never real to begin with, it was never his, never exchanged to "usable" USD.

Don't be a Fred, Protect yourself, be smart with your investments, play the long game, it's these "get rich quick" ideas that leave you vulnerable to scammers, leave you susceptible to bad decision making and ignorant of facts that aren't inline with your emotional investments. Trade wisely. Good luck!