How to Mentally Prepare Yourself for Market Pullbacks

How to Mentally Prepare Yourself for Market Pullbacks

Even if every single aspect of your investment research is correct, there will be down days along your wealth-building journey no matter what asset you own.

Whether you’re buying in a bull market and expecting higher prices… or in a bear market and looking for bargains… At some point, your position will experience a pullback in price.

Sometimes it happens right after you buy in. At other times, it happens after you are already in profit. No matter when or where it happens in your ownership cycle, pullbacks can be a nerve-wracking time.

As the price declines, it’s natural to question yourself, your decisions and your convictions.

It’s easy to have conviction in an investment when its prices are roaring higher… Much more difficult when it’s getting whacked about by market forces.

I bring this up because bitcoin is in the midst of such a pull back.

Since hitting a new all-time high of $73,738 on March 14, bitcoin’s price has retreated to a low of $62,500. That’s about a 15% drop in five days.

Now as far as bitcoin goes, this is pretty tame action. Even during a bull market – such as we’re in right now – bitcoin has a history of pulling back between 15% and 40% or more all while being in an uptrend.

As I wrote in a previous essay, this type of volatility is the nature of the beast when it comes to bitcoin. It’s the price we pay for the chance at life-changing gains.

Regardless, the rollercoaster ride to riches can be gut-wrenching. And those who aren’t prepared will panic-sell out of a position too early at the first sign of trouble.

Friends, I don’t want that to be you. So in this essay, I’ll show you how to mentally prepare for the inevitable down days on your wealth-building journey.

Step 1: Is the Trend With or Against You

When one of my investments experiences a pullback, the first thing I always ask myself is this: Am I in an uptrend or a down trend?

Am I early in the bull market or am I late. So how do you answer those questions?

Fortunately, when it comes to bitcoin, those questions are easy to answer.