Everyone is familiar with financial risk but just as important is knowing your psychological risk

The bounds in which you are able to deal psychologically with situations

It could be something that doesnt make financial sense but is the difference between happiness and ptsd

The ideal way to deal with psychology is to not think about whether you are right to buy or sell but to think about if you are ok with being wrong

eg If you buy knowing it could go to 0 then you wont be happy if it happens but you wont be miserable

Similarly if you sell knowing it can still go up 10x but you considered being wrong then even if it does you will be ok with it as you considered your psychological impact of being wrong and realised it was the right decision as opposed to 'oh shit I thought it wouldnt go higher'

Reason people lose money over longer periods isnt because they cant make sense of the financial risk

Its because they dont consider their psychological risk which is the one that makes the decisions

When people fomo, panic sell etc-they are psychological triggers not financial