I wanted to start writing a post about how to get out of bad bets. But instead I read some articles about risk psychology and I think that’s the best way to explain why we end up loosing many not only on betting, but in investing on general.
The best advice I can give on YouHodler Multi HODL up bets on crypto like Bitcoin or Ethereum is that you need to be patient. And unless you made a very bad choice, like at the top before there is price correction, you should always wait and get out in the winning side. Now if you are not patient enough is better you don’t use Multi HODL because you can loose a lot of money with fear of losing or FOMO bets (Fear of missing out)
Make a technical analysis and a plan. Stick to it and be patient.
Crypto mostly goes up except on special days where it can have big correction

In my personal opinion what plays mostly against a good bet or investment is impatience, fear to loose, and being too emotional. Actually if you want to be a good player when making a bet, you need to learn to use that feelings on your side, but naturally this forces play against you. You could wait some minutes more and get out of the bet 10% higher, but you could not stand the first two red candles and got out before time, and like this multiple different variations that are in the history of my bad bets.
Risk-taking behavior refers to situations in which a decision is made whose consequences depend on the outcomes of future events. Events that we study previously and are quite sure that go in one direction. But even the most perfect analyst can make a bad guess and the top of that the prices of Cryptocurrency are influenced by so many things with many big players and institutions buying and selling millions that the most bully upwards run can end up in a scary downfall at any moment of the day. Unpredictable.
To resume it in a few words the fact is that most of the time our knowledge of probabilities is far from exact. We can study the last movement days, draw on the chart and make prediction lines, even read analysis of experts that are years studying this markets and still with all this information we can fail. Because behind the visualization of a stock price chart there is a billion dollars market, with humans taking decisions all over the world, updating that price movements. It’s not humanly possible to predict what will be the direction for the next days, not to say hours. We can estimate it, but then the prices can give us a cold bath of reality when the outcome is much different from our prediction.

The experimentalist’s view

Psychologists Kahneman and Tversky in 1979 asked subjects questions similar to this:
Which would you rather have, $3,000 for sure or an 80% chance of winning $4,000?
Most subjects prefer the $3,000 for sure even though the expected value of the gamble is higher:
0.80 x $4,000 = $3,200.

This kind of preferences are conventionally labeled “risk aversion” as are preferences favoring a 90% chance of winning $3000 over a 45% chance of winning $6000.
In my personal case I would for sure prefer the 3K since I have sometimes such a luck that I will fall in the 20% and get out with my empty hands.
There are many different theories among experimentalist’s about this. The portfolio theory is based on the premise that choices among risks reflect a compromise between maximizing expected value and achieving an individually determined ideal level of risk.
In the utility theory, subjects are assumed to “compute” something similar to an expected value, but instead of using the objective cryptocurrency amounts, they operate on subjective amounts. One that used this concept wisely was Daniel Bernoulli who said that the value of money is not absolute, but depends on how much one has already:

Any increase in wealth, no matter how insignificant, will always result in an increase in utility which is inversely proportionate to the quantity of goods already possessed

Bernoulli (1967)

An alternative explanation for risk aversion can be found in the idea that decision makers pay differential attention to the best and worst outcomes in gambles.

A Two-Factor Theory for Risky Choice
Behavior has both inner and outer sources. We are disposed by our unique constitutions and histories to behave in certain ways, and each person has an unique approach when it comes to making a bet or investment. Two-factor theory uses both a dispositional factor and a situational factor to explain risky choice. The dispositional factor describes the underlying motives that dispose people to be generally oriented to achieving security (i.e., risk averse in conventional terminology) or to exploiting potential (i.e., risk seeking in conventional terminology). These factors are sometimes in conflict and sometimes in concert, producing complex patterns of behavior in which risk averse choices and risk seeking choices exist side by side in the same individual’s behavior [Lola Popes, see references at the end of this post]

How to get the most of MultiHodl bets

I wrote already about the MultiHodl bets in my last blog post. Multi HODL is an innovative tool to bet on price changes on Crypto assets invented by YouHodler.com
My theory is many failed bets have something in common:
That we were not patient enough to wait until is in the winning side.

You may say, yeah! Right, but I was losing 20% of my bet… Sure I completely understand that and I also losed more than 20% on my own bets for that same reason.
Talking frankly there is two ways of getting out of a bad bet. Let’s say that you analyze the past days, have the bottom and top of the mountain tracked, and you think that it effectively is going up.
So you place a 300 € bet that is going UP, risk level X8, so there is some place for failure (As more X risk level the margin call is reduced) Well it starts go in the direction you think, but after 3 minutes, it starts going down.

This is an example of a real bet. Is not a simulation. Because of the fear that the never ending going down red line for 2 hours and not getting out to cut out looses short, you end up getting out in the worst place of all!

This fear is just not grounded! It’s just fabricated since after seeing this long red candles down after such a long time, you just loose all hope. This is not the way to do a right bet.
In case your prediction does not go as expected you have 2 options:

1. Cut your losses short, so if the curve does not go as you expected, you cut loose at 5% max very closely to the start.
2. Do not loose the hope, stay cold as a rock, and wait until the price goes up again and you can get out in the winning side.

But staying in the middle of this two is not a sane option and the way you can loose a lot of money.
Cut your looses short and keep your winnings at large!

To end up the story, I recovered that 60€ doing another 8 bets of about 9€ gain each. It can take many bets to recover from a very bad bet.
Another good option is to make a “seed bet” of minimum amount, like 60 €, with low risk and only after seeing your theory is like expected then you make the bigger bet. Remember that the starting point is the key for a good bet. The ideal kickoff is a MultiHodl UP bet in the base from the mountain after analyzing the past days lowest points.
But even like that things can get tricky so have an escape plan ready. If things drift from your prediction an unacceptable % you either cut your looses very short and assume the loss or you are patient and strong enough not to loose the hope and get out in the gain side. Believe me, most of the bets, could have gone right if the holding was long enough but instead I freaked out and got out in the bet in the worst moment.
But either 1 or 2 you don’t stay in the middle way. Because that’s the worst decision of all and you get out in the worst moment probably with a big loss.
Please note that this is only for the cases where you studied the margins and it’s not a crazy bet like going up at the top of the price or going down at the bottom of the mountain. This extreme cases do not count, if you do that I guess it was just a fail, and getting out as fast as you can is the rule!

Keep in mind that any money source that you use in this bets should be preferable Stablecoins and investment money that you can afford to loose!
I recommend to use Stablecoins or FIAT since loosing Crypto is always painful. The best is just use money and if you afford to win then you can buy more Crypto or just transfer it back to your local bank. Risky choices are choices that have an element of danger. They are risky and may come to a bad end in case the direction changes abruptly and you are not in control. Losses may be sustained, hopes may be shattered, or opportunities wasted. That said, keep your winnings at large, and cut your looses short!
Do not use a small screen like your mobile, half awaken, to place a bet after. Open TradingView or any similar stock market chart analyzer in a big screen and make a seasoned and thoughtful decision.

If you want to try YouHodler you can open an account here. Their app has great usability and feels secure, the withdrawals are fast, and their support answers within the hour. So far I had a very good impression of their Finance platform.
However I would never recommend to hold all your assets in one platform. We have half of our assets in YouHodler and the other half in another DeFi platform called BlockFi which also has very good recommendations.
BlockFi is launching very soon world’s first Bitcoin rewards Credit Card. This is great since enables you to use this card to get cash in any automatic terminal or also to buy things just like any other VISA card and earn 1.5% back in bitcoin on every purchase. We joined the waiting list.

References:
The psychology of risk – Lola Popes ( PDF )
Definition of Multi HODL