Many traders fall into the trap of holding on to losing trades, hoping that the price will eventually recover to the entry point. On the other hand, when they are in a winning trade, they often exit too early, securing minimal profits for themselves out of fear. To succeed as a trader, you need to reverse this approach: be more cautious when you are facing a loss, but let your profits run when you are winning. Developing a stop-loss strategy for your losing trades is crucial, rather than clinging to hope. Conversely, when you are in profit, let the trade run its course and capitalize on those profits.
Let me illustrate this with an example: Let's say you bought#ETHat $3,200 on the spot market and the price starts to fall. You might think, "Since I bought it outright, I'll just wait for the price to recover." But as the months go by, the price of#Ethereumcontinues to fall. Without a stop loss, you're stuck holding the asset, waiting for the market to recover so you can break even or make a small profit.
After a significant period of time - say, four to seven months - the price may finally return to your entry level, and in a rush to avoid another decline, you close the trade. Whether you break even or make a small profit, you exit prematurely out of fear of another decline.
While you may claim to have avoided a loss, the real issue is the time lost. Holding onto the asset for months prevented you from taking advantage of other profitable opportunities or engaging in short-term trades. This approach can become a destructive cycle where you continually lock your capital into underperforming positions, stifling your overall growth as a trader. Many of you may have bought various altcoins during bad times and held on to them for too long, hoping for a market recovery that may never fully materialize.
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