It may seem like a wild decision to invest in volatile cryptocurrency, but the rewards can be astronomical. As the gains are in the long-term more than the short, when to take profits from crypto is up to the investor. You need a plan for when you want to sell and how, whether it’s a year from now, five years from now, ten years, or twenty.
A general rule of thumb to use when taking profits in crypto investing is to wait until it’s gained above 100%. At that time, you know you’re in a good spot to start selling a portion of the investment without recouping a loss and still have a little skin in the game going forward.
If you’ve never taken profits in crypto, aim for small gains. You can make millions successfully trading Bitcoin and other crypto coins, but few do. If you see a small gain, take it. Most of the world’s best crypto traders who make sufficient annual income do so by capitalizing on small gains. They focus on reinvesting their profits in the right cryptocurrency on the best crypto exchange Canada.
Let’s learn more about how to take profits in crypto without leaving money on the table.
Set Target Prices and Make a Plan
Have a crypto coin trading strategy. Set a target price, such as, “When this crypto hits ‘x’, I’m selling ‘y’.” When you have a plan going ahead, it’s less likely you’ll struggle to know when to derive profits.
Don’t Buy and Sell Crypto on Emotion
Some people assume, “If my crypto coin is valued at ‘x’ today, surely it’ll be to ‘y’ by the end of the year.” They navigate away from their profit targets and wait, wait, and wait for further gains. If you’re sitting through massive gains and not making a profit and ignoring your crypto investment strategy, that’s a bad habit to get into. A crypto price can reverse quickly.
Hedge Profits Against Potential Losses
Due to the volatility of crypto, it makes sense to take some of your profits as a hedge against potential losses. Many investors will sell up to the amount they originally invested, and then everything remaining is all profit that you’re playing with.
Do Not Buy on Margin with Crypto
Buying on margin is getting a loan from a brokerage to invest with. Although this can be a profitable strategy, it’s a risk you don’t want to take. You could end up owing more than you invested.
You should never borrow money to buy crypto because eventually, you will run into trouble. Invest only your own money and money you can afford to lose. This is a strong recommendation if you’re driven by making a profit in this space.
Reinvest in Stablecoins to Build Your Profile
A possible way to take profits and use them in the crypto market is to bet on altcoins and divert profits slowly into stablecoins. If you don’t need the cash, you will be locking up your profits in a slightly more secure investment with this strategy.
Also, it will build your cryptocurrency profile. In addition, it will more likely to strengthen your long-term growth as you gain profits on the best crypto exchanges in Canada.
Don’t Sell an Entire Holding at Once
Do not sell all of your cryptos at once. Place orders fractionally based on what’s going on in the market. Start to sell small percentages weekly. This way, you’re maintaining your profile while reaping profits. If the crypto continues to go on an upswing, you’re still positioned to benefit instead of selling everything and regret having made that move.
Look for Divergence in a Crypto Coin
Divergence is when there is a disagreement between an indicator and the price. Recognize the patterns. The relationship between indicator and price is always evolving. Divergence occurs when the indicator does not represent the price decreases or skyrockets. This suggests a possibility of a price retracement. This can be used to both buy and sell crypto for profit.
Cutting Losses Can Protect Your Profits
No one likes to lose money but sometimes losing what you’re about to lose is better than losing more. Knowing when to cut your losses and take out your investment in crypto. This saves profits. Three signs that it’s time to sell: development has slowed or stopped altogether, community support for it is shrinking, and you have doubts about how it’s being managed long-term.
Don’t Panic-Sell If There’s Long-Term Value
This may seem contradictory advice, but just like a good crypto trader knows when to cut losses, they must also know not to panic-sell. If you believe a crypto coin has long-term value, plummeting values shouldn’t be treated as the end of the road. Protect your profits by sticking with a given cryptocurrency so long as you have reason to believe it’s a good investment.
