For long-term investments in Bitcoin, BJ or Zelica, stop-loss orders are unnecessary since they are investments rather than trades aimed at short-term profits. As a result, such restrictions could limit the potential of holding investments for a prolonged period. However, for trading purposes, stop-loss orders are crucial because failure to set one increases the likelihood of losing money on the trade.
Investing vs. Trading: Do You Need a Stop Loss Strategy?
Investing and trading are two different things, and it’s important to understand their differences when it comes to managing your risks. One common strategy in trading is the use of stop loss orders. A stop loss order is an order placed with a broker to sell a security when it reaches a certain price level. The goal of a stop loss is to limit the amount of loss you may incur from a declining stock price.
If you’re investing, you may not necessarily need a stop loss strategy. When you invest in a stock, you’re buying it for the long run, with the expectation that the stock will increase in value over time. In this case, a stop loss may not be necessary, as you’re not interested in taking profits in the short term.
According to the YouTuber in the video, if they’re investing in Bitcoin, BJ, or Zelica for the long run, they don’t use a stop loss. They’re not interested in taking profits short term, and they’re looking to hold onto the investment for an extended period of time. For long-term investments, a stop loss may limit the potential gains you could make if the stock continues to increase in value.
However, if you’re trading, it’s essential to have a stop loss strategy. Trading involves buying and selling stocks in the short term to make a profit. In this case, a stop loss is critical to limit the amount of loss you may incur from a decline in stock price. If you don’t have a stop loss in place, you run the risk of losing money, which can be costly.
In conclusion, whether or not you need a stop loss strategy depends on the type of investment or trading you’re doing. For long-term investments, a stop loss may not be necessary, as you’re holding onto the stock for an extended period of time. However, if you’re trading, a stop loss is crucial to limit your loss and manage your risk.