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Concept. September 28, 2021. What is a Melt-Up?

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@marcusantoniu26
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According to Investopedia, a melt-up is a sustained and unexpected improvement in the performance of an asset, driven partly by multiple investors psychologically ready to buy, rather than by solid economic improvements.

It is important to acknowledge that a melt-up is a psychological phenomenon and as such it is unpredictable. It is very difficult to know when it will end. What is sure is that it will end.

Investing during a melt-up is risky, however, some measures can be taken to protect form sudden losses. Using stop-losses based on the volatility of the asset in question and protecting profits by selling quickly may be measures to be taken when multiple assets are experimenting a melt-up.

This post is intended to only raise awareness. In order to make actual financial decisions please contact your financial advisor and/or tax advisor prior to making the decision.

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