Adam Smith

Feb 8
4 min read

The Investor’s Guide to Navigating Impermanent Loss

A lot of people think that investing is a surefire way to make money. They see stories about successful investors and they assume they too can get rich quick, with no investment risk. The reality is that investing isn’t always profitable—even when you do your homework and invest wisely. In fact, sometimes it can be downright dangerous to put money into an investment that doesn’t pan out the way you want it to. That's why we're going over what impermanent loss is and how you should deal with it if it happens to you or someone close to you.

What is impermanent loss?

Impermanent loss is the loss of capital. It can happen for a number of reasons, including inflation, market volatility and recessions.


This type of loss is different from permanent loss (i.e., when an asset loses all its value). In fact, it's important to note that impermanent losses are not permanent: if you sell your stock at a lower price than what it was worth before investing in it--and then buy back into that same security at a higher price within one year--you won't have incurred any actual losses on paper because they were only temporary in nature!


The key to dealing with impermanent loss

The key to dealing with impermanent loss is not to let it destroy your confidence and make you panic.


It's important to stay calm, because if you don't, then you'll make rash decisions that may lead to more losses in the future. It's also important not to give up on investments just because one or two went bad--this could lead investors away from stocks altogether at precisely the wrong time (i.e., when they're rising). Finally, don't get discouraged by one bad year; if anything happens over a period of years rather than days or months, there will be many upsides along with some downsides during that time period as well!


The key to dealing with impermanent loss is to not let it destroy your confidence

The key to dealing with impermanent loss is to not let it destroy your confidence. It's easy to be tempted to give up or become reckless, but there are better ways of dealing with this kind of situation. First and foremost, try not to let your emotions get the best of you by making rash decisions based on fear or anger. Instead, take time for reflection so that you can make informed decisions about how best to proceed next time around--and yes: there will be a next time!


Second: don't be afraid of taking risks in the first place; however, don't go overboard either! If something doesn't work out as planned then no harm done...you just learned something valuable about yourself and your investment strategy along the way (which will help guide future investments). Remember: mistakes aren't fatal - they're actually good opportunities for growth if handled properly!

Conclusion

Impermanent loss is a fact of life. We can't avoid it, but we can learn how to deal with it in a way that doesn't destroy our confidence. The key is not letting impermanent losses affect our overall self-worth or the way we see ourselves as investors.

24
16
24
16
24

Related articles

Activities

See all

FREE

MOMOGURO

MORE

DEADLINE: 18.02.2023

NFT

LOW RISK

EASY

112

535

100 USD

ARAKIS FINANCE

MORE

DEADLINE: 18.02.2023

NFT

LOW RISK

ADVANCED

362

1 734

FREE

CUBISWAP

MORE

DEADLINE: 18.02.2023

NFT

LOW RISK

EASY

83

219

FREE

NOODLE CAT GAMES

MORE

DEADLINE: 18.02.2023

NFT

LOW RISK

EASY

34

374

Norion OÜ
Harju maakond, Tallinn, Lasnamäe linnaosa, Tähesaju tee 9, 13917, Estonia.
Registry code: 16382854

Subscribe to our newsletter

Product updates, news and promotions. No spam ever.