Many traders tend to hold onto losing positions, hoping the price will return to their entry point. Conversely, when they're in a winning position, they often close the trade prematurely for minimal profits due to fear. To become a successful trader, itâs essential to adopt an optimistic mindset when youâre in profit and a more cautious approach when youâre facing a loss. Set a stop loss for losing trades instead of holding on to them. However, when you're in profit, let your trades run to maximize your gains.
Let me give you an example:
Imagine you bought #ETH at $3000 in the spot market, and now you find yourself in a losing position. You think, "Since I bought in the spot market, Iâll wait for the price to come back to my entry." However, as time goes on, the price of #Ethereum continues to decline, and without a stop loss in place, you hold on, hoping the market will recover so you can sell at your entry point.
After four to six months, the price may finally return to your entry or slightly higher, and you close the trade quickly, either at break-even or with a tiny profit because you fear the price will drop again.
Now, you might argue that waiting for the price to return to your entry isn't a problem since you didnât incur a loss.
Yes, you didnât lose any money, but you wasted valuable time holding onto that coin, time you could have used to invest in other opportunities or engage in short-term trades. I can promise you that if you make this mistake once, you are likely to repeat it, trapping yourself in a cycle that can hinder your trading success.
I can promise you that many of you have purchased countless altcoins in the spot market at the wrong time and price, holding onto them for months or even over a year, still clinging to the hope that the market will recover so you can sell at your entry point.
