Many investors fear drawdowns and celebrate every rise, not realizing that both are normal. But there's a nuance: smart behavior during these moments turns volatility into your ally.
📉 Why drawdown is an opportunity?
📉 A drawdown is a temporary decline in your account. For trend strategies, it's normal. But instead of panicking, you can use it to improve your average entry price.
📊 Averaging: when the price drops, you can buy more at a lower price. This lowers your average entry and increases potential profit on a rebound. If you just hold, you still win, but adding amplifies the effect.
❗️Example from LINX history: after the massive February 2024 (+64%), there was a small drawdown of –1.77% in March. If you just held, you'd survive it. But if you bought more during the drawdown, you'd earn even more on the subsequent rise.
📈 Why take profit after growth?
No one knows the top of a trend. After a strong move, a correction is highly likely. Taking partial profits protects your gains and reduces risk before inevitable pullbacks.
↗️ Rebalancing: by taking some profit after a strong rise, you reduce your exposure and make your portfolio more resilient to drawdowns. The freed funds can then be used to buy more on the next dip.
❗️Same example: after February's +64%, LINX had a –1.77% drawdown in March. If you had taken some profit after February, that March dip would hardly have affected you, and you'd have cash ready for a new entry.
🎯 Smart investor tactics:
🔹During drawdown: don't panic; consider buying more (if you believe in the strategy and market).
🔹After growth: take partial profits, especially after strong moves (e.g., when your deposit grows 20–30%).
🔹Always: balance risk and reward; don't let emotions rule.
👉 Next post: how to learn to wait patiently and not panic in sideways markets.
⭐️ Bitronix — cold calculation over hot decisions.
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