Glossary

Weak Hands

Easy

An investor prone to panic selling at the first sign of a price decline.

What Are Weak Hands?

“Weak hands” in crypto refers to traders that are prone to panic selling at the first sign of a price decline. These traders or investors have low confidence in the project or market and get emotional when they see the prices of the cryptocurrencies they invested in decline. The term carries a negative connotation since these traders are often inexperienced.

More experienced and professional traders exploit these weak hands by trading against their predictable behavioral patterns. For example, experienced investors use FUD to drive market sentiment and buy assets when weak hands are selling. This causes weak hands to be "shaken out" and sees coins transferred to these stronger hands that trade with more conviction and a clear plan. 

How Do Weak Hands Trade?

Weak hands trade with little conviction and based on emotions that prevent them from making good decisions. For that reason, weak hands are considered the type of investors that are the easiest to manipulate and shake out. 

Weak hands often buy based on good news that only has a short-term impact, like a temporary spike in the price of a token. However, they also sell quickly when hearing bad news that causes token prices to dip. That is why more experienced traders with bigger budgets can consciously spread rumors about a token to cause the price to dip and weak hands to panic-sell their assets. This is called "shaking out" the weak hands.

What Is the Meaning of Paper Hands?

“Paper hands” is a synonym for weak hands and refers to traders that sell their cryptocurrency at the first sign of bad news. They are the opposite of diamond hands.

What Is the Meaning of Diamond Hands?

Diamond hands is the opposite of weak hands and paper hands and refers to traders that have maximum conviction in their investments. Diamond hands can be convicted to the point of irrationality and are closely related to a HODL strategy. These traders rarely take profit and prefer to hold on to their investments regardless of price changes. 

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