In the world of spot trading, traders are constantly challenged by the sharp fluctuations in asset prices, which requires careful strategies to deal with potential losses. The most prominent strategies used are stop losses and patience. However, the most important question is: when does an investor consider his loss to be an actual loss? In this context, we can take the Hamster coin as an example to better understand these strategies.
Patience in Trading: A Long-Term Strategy
Patience is one of the most important qualities a trader should have. During periods of rapid market decline, many investors tend to make emotional decisions such as selling to minimize losses, but this may mean exiting at the wrong time. In some cases, temporary fluctuations are part of the market dynamics, and the price returns to rise after a while.
In the case of Hamster Coin, for example, when the coin experienced a sharp decline, many investors sold it at that time, believing that it was a sure loss. However, over time, the coin experienced a sharp increase in its value, which made those who were patient with this coin reap huge gains. So, through patience, these investors were able to avoid what is called “selling at the bottom” and make huge profits.
Stop Loss: A Crucial Tool for Risk Control
Stop loss is a well-known strategy that aims to set a certain level of loss at which to automatically sell in order to preserve capital. This tool is especially useful for investors who cannot follow the market constantly or who face extreme price fluctuations.
The problem, however, is that triggering stop-loss orders in volatile markets can lead to selling assets at the worst possible moment. In the case of Hamster, when its price hit a low, stop-loss orders were triggered by many investors who feared further declines, only to find out later that the currency had unexpectedly started to rise. Herein lies the dilemma: was this loss “real” or just temporary?
When is a loss considered a real loss?
It is important to differentiate between actual loss and temporary loss. Actual loss occurs when an asset is sold at a very low point due to emotional reaction or hasty decisions, without considering the bigger picture of the market. A temporary loss occurs when the market is in a temporary correction phase, and then rises again after a short period. If you sold an asset based on fear or panic, and then saw that asset rise later, the loss can only be considered an “unrealized loss” if you did not delve into a deep analysis of the market.
Therefore, a loss is considered a “real loss” only when a trader makes a sell decision based on his analysis of the markets that is based on a deep understanding of the risks, and not because of being affected by emotions or a desire to quickly get out of losses. If the market is unstable, but you have confidence that it will recover after a while, patience may be the best option.
How do we avoid falling into the trap?
One way to avoid falling into the trap is to manage risk effectively. This can be achieved by setting acceptable loss levels in advance, and setting entry and exit points based on technical and fundamental analysis, rather than guesswork. Also, setting clear financial goals can help an investor make more balanced decisions during volatility.
In the case of Hamster, traders who decided to sell the coin on a downtrend would have been better off taking their time and studying other market factors, such as supply and demand trends, technical analysis, and general market movements, before making their decisions. A trader who does not lose confidence in their investments too quickly and focuses on their strategies away from emotions may find themselves in a better position to make big profits.
Ultimately, a loss doesn’t always mean a final loss. Market volatility is normal, and patience and careful analysis can turn a potential loss into a profit. On the other hand, stop losses are a necessary tool to protect capital, but using them excessively or inaccurately can lead to selling assets at the wrong time.
If we learn how to balance patience and stop losses, and focus on scientific and systematic risk management, we can avoid big losses and take advantage of long-term market opportunities. In the case of Hamster Coin, making the right decision at the right time could have avoided losses and opened the door to big gains.
Note: If you are thinking of investing in Hamster Coin or any other asset, always make sure to do the necessary analysis and follow
Carefully thought out trading strategies.
