If you stop-loss a coin and then find it has risen back, should you stick to your predetermined take-profit and stop-loss strategy?
Yesterday, I set a stop-loss for Wojak at a 50% loss, and now it has risen back. Should I continue to execute this stop-loss strategy?
Based on personal experience, it’s still important to stick to your take-profit and stop-loss strategy because these are principles of operation. Doing the right thing in the long term can ensure your capital is not subjected to significant losses.
Not averaging down on losses but adding to positions when profitable is a principle that has been repeatedly emphasized in the group. I’ve seen many people, including many in the group, who initially only invested in 10 SOL. When they incurred losses, they tried to average down, only to end up trapped in the position.
For a test position, be prepared for a 50% loss. If an uptrend is confirmed later, it’s not too late to chase. For example, with Wizard last time, I also exited my test position after a 40% loss. Then, when I saw an uptrend, I re-entered with a test position and eventually gained 3x returns.
Using Axiom, you can set take-profit and stop-loss levels when establishing a test position. If entering with a market value of around 500,000, my take-profit for the test position is to sell 50% at 5x. If entering with a market value of around 1,000,000, I set it to sell 60% at 3x. Stop-loss is always set at 50%.
Meme coins are highly volatile, with 50% fluctuations being common. Of course, if you are very wealthy and enter with less than a 1,000,000 market value, you might choose not to set a stop-loss. For example, if you only trade 1 SOL each time and never set a stop-loss, and you trade 1 to 2 projects daily, you could hold until reaching a market value of over 20,000,000 before selling. In this case, even if only 1 out of 20 projects succeeds, with a 5% success rate, you can achieve positive expected returns.
This was the strategy used during DNF. Initially, there was a daily loss of $1,000, with continuous losses for over a month. Later, one coin earned a thousandfold return, which made up for all the losses.
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