Hi everybody!
Today I want to talk to you about a trading strategy that allows you to limit your losses. This strategy is called a stop loss.
It's used to set a loss amount without having to constantly monitor the price.
This strategy is linked to the sunk cost cognitive bias.
An example of this strategy is the following: Let's say we buy $100 worth of Ethereum, but we don't want to lose more than $10. So we set a stop loss of $90. If the price of Ethereum drops to that point, we sell and accept that loss, but we have the peace of mind that we didn't lose all our money and that we still have capital to continue trading and recover what we lost.
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