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What are paper hands in stocks?

What are paper hands in stocks?

In 2021, during the meme stocks craze, a new term – paper stocks. The term paper stocks first appeared in forums and social media. Pair of hands emoji and a roll of toilet paper emoji are used to describe these phenomena on social media. Let’s see what paper hands precisely means.

What are paper hands in stocks?

In the context of stocks, the term “paper hands” refers to investors or traders who are considered weak or easily shaken by market fluctuations or negative news. It is a slang term describing individuals prone to panic sell. They tend to sell their stocks or investments at the first sign of a decline or volatility instead of holding onto them for the long term.

The term “paper hands” implies that these individuals lack conviction or strong hands in the market. They may be characterized as having a low tolerance for risk or being easily swayed by short-term market movements. At the first sign of trouble, they may sell their stocks prematurely, potentially missing out on potential gains or reacting emotionally to market fluctuations.

On the other hand, investors or traders who are described as having “diamond hands” are considered resilient and unwavering in their commitment to holding their investments despite market volatility or short-term setbacks. They have a long-term perspective and are less likely to be influenced by short-term price fluctuations.

It’s important to note that the terms “paper hands” and “diamond hands” are slang expressions and not formal investment terminology. They are used in online forums, social media, and discussions among traders and investors to describe different behavioral tendencies in the market. Successful investing often involves a combination of informed decision-making, risk management, and a disciplined approach to holding investments based on one’s investment goals and time horizon.

Besides stock investors, the crypto community also widely accepted the term for those with no appetite for risk.

Traders with diamond hands

Who are investors with diamond hands? Investors with “diamond hands” are those with a long-term mindset and high-risk tolerance. They are more likely to hold onto their investments despite short-term market fluctuations, believing in their holdings’ long-term value and potential.

Diamond hands and “paper hands” are informal expressions used in online forums, social media, and colloquial discussions among investors and traders. They are not formal investment terminology and should be understood as slang terms to describe different behavioral tendencies in the stock market. Successful investing often involves a combination of informed decision-making, risk management, and a disciplined approach aligned with one’s investment goals and time horizon.

Paper Hands vs. Diamond Hands – which one should you be as an investor?

These are two opposite types of investors present in every market. Paper hands are selling their assets at the first sign of a decline in price or trouble and volatility in markets. They minimize their loss but also lose the opportunity for profit. This term generally has a negative connotation. Unlike paper hands, diamond hands describe resolved and stubborn investors with a long-term strategy. Buy and hold is their main trading principle. They don’t sell when strong market fluctuations occur. However, the term can have both positive and negative connotations. The stubbornness of investors is only sometimes a good quality since it can be a sign of bad risk management.

The post What are paper hands in stocks? appeared first on FinanceBrokerage.

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