What Are Weak Hands and Who Are They Used For?

What Are Weak Hands And Who Are They Used For?

Weak Hands are used for investors who have less experience in both Forex and the cryptocurrency market in general and are more prone to emotional decision-making.

Göknil Bağatarhan

Weak hands are a common term used in the financial industry for both investors and traders. Weak hands are generally characterized by a lack of confidence, resources, or ability to hold positions or execute trading plans.

With a negative connotation, Weak Hands traders plan their strategies following the behavior they adopt. It involves buying after a technical pattern on the charts breaks to the upside or selling after a break to the downside. Weak Hands traders who exhibit this behavior are often guided into harmful trading by more experienced traders or market makers.

Weak Hands is also used to refer to investors who enter the relevant markets from a speculative perspective. In some cases, they may prefer to be speculators rather than traders. They enter and exit to reverse these positions based on small price changes in the normal course of the markets.

These investors lack the conviction and financial strength to maintain their positions.

Emotion Factor in Investors

A big challenge for investors and traders is to execute trades during bad times. For instance, towards the end of a bear market, there is a negative mood in the market. For those who hold on when the market is bottoming out, losses can be maximized. It can create fear and anxiety. Some people see this as a driving force. However, valuations are likely to be cheap. At the same time, the charts may present investors with technical conditions that are closer to buying than selling.

A Weak Hands trader makes decisions based on emotions rather than rational data. Whenever a downtrend starts or bad news spreads, Weak Hands investors prefer to exit their positions. They usually sell all their assets at a loss. Such investors do not believe and do not expect their investments to generate returns in the long term. Even small fluctuations in the markets can be enough for these investors to exit their positions. Weak Hands traders are driven by emotions such as fear, uncertainty, worry, and doubt (FUD). For this reason, their behavior is not difficult to predict. Their investing behavior is clear. They often tend to enter and exit positions at the most inopportune times. Weak Hands traders often prefer short-term trading.

In futures markets, Weak Hands do not have a negative meaning. It refers to a person or persons who simply trade contracts without the intention of buying the underlying assets or fulfilling their position.