Weak Hands | Binance Academy

Weak Hands

Beginner

Community Submission - Author: Bryce Lippai

“Weak hands” is a term used to describe a trader or investor that lacks the confidence, resources, or ability to hold their positions or to stick with their trading plans. However, the term may be employed differently according to the type of market.

In both the Forex and cryptocurrency markets, “weak hands” is frequently used with a negative connotation, which describes the behavior of inexperienced and emotional traders. Usually, these traders present predictive trading patterns and strategies, which are frequently exploited by market makers and seasoned traders.

So we may define a “weak hands” trader as the one that buys or sells compulsively, driven by emotions rather than logic. They tend to exit positions when the market shows any sort of bearish behavior or due to bad news, often selling their assets for a loss. Such individuals don’t believe in the long term growth of their investments and can be easily “shaken out” by common price swings.

Put in another way, weak hands traders have predictable buying and selling behaviors as they are driven by fear, uncertainty, and doubt (FUD). They tend to enter and exit positions in quite inappropriate moments, and are not able to hold their assets for too long.

In the futures markets, however, the term doesn’t carry a pejorative meaning. It simply describes an individual that only trade contracts, without any intention of taking the underlying asset or settling their position. They act more as price speculators than investors.

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