Bagholder
Market
Investor holding depreciated assets after a downturn.
A bagholder is someone still holding an asset that dropped far below their entry. It can happen when a trend ends or a story fails. The fix is not a magic signal. It is a process. Write simple rules, use alerts, and size positions so a loss is tolerable. If a trade is not working, taking a small loss is often better than hoping.
Frequently asked questions
How do people become bagholders?
They buy too late, add to losers, or ignore risk rules. A plan helps avoid emotional decisions during fast moves.How can I avoid bagholding?
Use position sizing, set stops or alerts, and write exit rules before entry. Diversify and track liquidity to reduce slippage on exits.What if I already am one?
Assess the thesis honestly. Consider tax effects, opportunity cost, and whether to cut losses or hold a smaller position.