Why Every Investor Needs a Stop Loss: Learn from My Mistake

Welcome back,

When we become a investor our shoulders get's heavy because few responsibilities comes to us with investing in each and every single asset. Be it bitcoin, Stocks, Gold, or any other asset. One of those major responsibilities is to keep track on your investment so that you avoid experiencing major loss in any of them. One can't always keep an eye on every single asset and that is the reason we have options like stop loss for risk management of our money and the fact is that most of the spot buyers or what we call long term holders don't go with the idea of stop loss at all.

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The above portfolio belongs to me and it was an experiment done by me two years ago. I bought two risky assets and left them to see what will I get after sometime. The mistake I did was to not set the stop loss and that costed me the reduction in my portfolio value by more than 90% and even with the worst case situation if I would have set a stop loss at 50% portfolio holding my current value would have been 5X from where we are seeing it right now. A 50% loss is still a loss but why that was a better situation? Can anyone answer.

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https://pixabay.com/illustrations/bear-market-baisse-courses-4159033/

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The difference in both the situations are quite big and I will tell how. The recovery from 50% portfolio value is much more easier compared to a 10% portfolio value. Ethereum is trading close to 2100 dollars at the time of writing this blog and we all know it is considered the safest crypto token after bitcoin so even if I had invested my portfolio value in Ethereum, there were high chances of my portfolio reaching it's break-even valuation or even more than that. Apart from that the situation I am right now where one might feel mentally disturbed would not be the case with 50% portfolio value.

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https://pixabay.com/photos/cryptocurrency-crypto-blockchain-7214367/

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So make sure you practice Stop Loss, this was a very small portfolio valuation of my original portfolio so it isn't much bothering me right now but for a person who had everything invested in a portfolio like that will barely have the courage to try and recover his or her portfolio value to their original valuation.

If you have CCD tokens from Crypto Company you can stake then and earn HSBI. I also found that yesterday when I was going through some blogs and as I am following their account as I myself invested in CCD long back I saw their post and thought of sharing it here in my blog.

Thank You and Happy trading everyone.