Recently, the question I get asked the most by my brothers is: If I'm experiencing a floating loss, should I hold on to my position!
This is a multifaceted question!
It relates to the size of your capital, the rationality of your position management, and the correctness of the overall direction!
In simple terms: If your overall direction is correct, you can appropriately hold on to your position, and if your position size is also okay! Then occasionally holding on is appropriate!
The core of this relates to a term: Profits and losses share the same origin!
How much risk can you bear to accept how much profit, everyone's capacity for bearing risk is different, trading skills vary, and capital sizes differ! It cannot be generalized! But based on my personal trading experience, if you need to hold on, then hold on; if you need to cut losses, then cut losses! If the overall direction is good, what do you have to fear by holding on? If the overall direction is wrong, then what are you holding on for?
As a retail investor, ask yourself one question: Is it more painful to cut losses or to hold on and incur losses? Naturally, you will have the answer! But all of this is premised on: You must have a sufficient understanding of the overall direction; otherwise, holding on is just looking for death!
The stock fell for three consecutive days, and at most, I had a floating loss of 18,000 USD, but today, everything came back in the afternoon, which highlights the importance of direction!
