How to understand and profit from FUD

Fear, Uncertainty, and Doubt Fear, Uncertainty, and Doubt Fear, uncertainty, and doubt (FUD) represents a disinformation strategy used in a variety of fields to foster doubt in a specific thing. In finance, this most commonly is used in the crypto space, which erodes confidence in cryptocurrencies. However, any asset theoretically can be the target of FUD.At its core, FUD can describe any strategy used in sales, marketing, public relations, or even politics. The primary aim is to sow doubt through fake information and appeal to people’s fears of a spec Fear, uncertainty, and doubt (FUD) represents a disinformation strategy used in a variety of fields to foster doubt in a specific thing. In finance, this most commonly is used in the crypto space, which erodes confidence in cryptocurrencies. However, any asset theoretically can be the target of FUD.At its core, FUD can describe any strategy used in sales, marketing, public relations, or even politics. The primary aim is to sow doubt through fake information and appeal to people’s fears of a spec Read this Term... We have all seen FUD one way or another, consciously or unconsciously.

This common tactic is used as means to emotionally manipulate people into either selling their assets or occasionally as bait for a pump and dump FOMO fueled scheme.

When it comes to crypto, for example, hundreds of thousands of articles have probably been posted claiming the end is near, investors are living in a bubble, and, of course, suggesting them should sell it all.

The modus operandi is usually the same

First, journalists will want to take an actual fact such as a government cracking down on a platform or crypto related application.

Then, you, as a reader will see that same fact, spun, and escalated to “could this mean the end of crypto?”, “crypto’s downfall is here”, “forget about crypto”, etc.

As readers take these headlines on, most of them never actually wonder if it’s entirely logical to abstract that specific fear to an entire industry.

So, what makes an actual news piece go from reporting facts to turning itself into the harbinger of doom?

Headlines are good sources of information, but writers are actually incentivized to write “clickbaity” titles which churn readers and, as we all know, time and time again it has been proven that emotional headlines will get more clicks than boring ones.

Given, that, what should you believe in when it comes to news and your assets?

The best possible answer we could give you is to do your own research and remember to diversify your sources and inputs.

Social media platforms like Reddit or Telegram groups are great, but can also be biased, and, in some cases, manipulated by users paid to shill for a certain stock, crypto, or behavior. So, take everything with a grain of salt.

By looking beyond one or two sources, you’ll be met with both corroborating and opposing viewpoints which, in turn, will either solidify your position and resolve, or convince you otherwise.

As a reminder, you should be basing your selling position based on how the market is doing and how much you believe in your thesis, or the project itself, not off of headlines.

Another tip worth mentioning is that improving your trading psychology will go a long way when dealing with FUD.

As a starting point, whenever you’re doubting something, start writing down what is “fact” and what is “feeling”.

You’ll soon learn that deciphering your emotions from the truth will help you find what to believe and what to invest.

Is it at all possible to profit from FUD?

Well, to put it simple, yes.

Depending on your experience as a trader, you can take easily take two different routes to profit from FUD:

1. Shorting: If your FUD sense is tingling regarding a specific stock or token, why not short it? If you are correct and there is a FUD campaign surrounding them, by shoring them, you will profit as their price starts going down.
2. "Buying the dip": theve ever so popular internet expression is actually valie here. If you are inexperienced when it comes to shorting, you can simply wait it out and buy the dip! Sure, you might be trying to catch a falling knife, however, if you can actually pull it off, you will be able to quite literally “Buy low, sell high”.

Wrapping up

Recognizing a FUD campaign against a certain stock, crypto, or even industry is great. Profiting from it, however, is a lot better. If you known the ins and outs of a business or project, you’ll be adamant in your resolve and steadfast in your profits.