Traders often fall into the trap of holding onto losing positions, hoping the market will eventually turn in their favor. This leads to a cycle of missed opportunities. On the other hand, when trades are profitable, theyâre frequently closed too early due to fear of losing gains, limiting the potential for bigger profits. A more effective strategy for long-term success is to set strict stop-losses to protect against major losses and to stay patient when in profit, allowing the trade to grow rather than cutting it off too soon.
For example, letâs say you bought Ethereum at $2,950 in the spot market, and it started moving against you. Instead of cutting your losses early, you hold onto it, thinking the price will eventually come back to your entry point. But as time goes by, the price continues to dip, and months later, when it finally reaches $2,950 again, you rush to close the trade, either breaking even or pocketing a tiny profit because of the fear of further declines.
At first glance, this might not seem like a bad strategy because you didnât lose money. But whatâs overlooked is the time lost. Thatâs time you couldâve spent on better opportunities or executing short-term trades with more potential. This pattern is easy to fall into, but itâs a cycle that keeps you stuck, limiting your ability to capitalize on new trading setups.
Itâs likely that many traders have found themselves stuck holding underperforming altcoins for months, possibly even over a year, waiting for prices to bounce back. If youâve done this before, you know itâs a difficult habit to break, and it can significantly hinder your growth as a trader.
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