Crypto exit strategy Revealed – When to sell your coins 2021
Crypto exit strategy Revealed
As important as it is for any new investor to enter a position at a great price, i strongly believe knowing when to exit, is one of the most significant characteristics of being a successful investor. Today, because cryptocurrency moves in cycles, it is so so important for you to know how to take your hard-earned money out of the market.
So you don’t, lose all the profit that you’ve gained over the year. So in this Content i’m gonna give you the full custom, mapped crypto exit strategy for any of my new investors, so that you know exactly what to do in this crazy bull run and still leave profitable.
First we’re, going to talk about what a proper exit strategy is.
We’re then going to talk about why you need to develop one and towards the end. We’re, also going to be sharing with you. My step-by-step method and exactly what i plan to do in terms of my own exit strategy for this year.
I do need to mention. I am not a financial advisor and anything i say in this. Video is going to be for entertainment and educational purposes only so to begin. An exit strategy is simply just a contingency plan, with the intent to liquidate a position, and the goal is to limit your losses while trying to maximize your potential gain.
Please know this before we even get more into the video, no matter how good you are at reading candles and charts, you will never be able to perfectly time the market 100 of the time. So the main reason why you need an exit strategy is simply because the result of holding a coin for too long due to greed can result in some substantial losses or you could just lose out on all of your gains.
Let’s. Use dogecoin as this example, if you decided to buy into doge earlier this year, and the price had then shot up and did its thing say, a hundred percent, your first natural instinct would be wanting to sell and realizing the gains that you made well.
The issue is that you’re hearing on mainstream media, that people are becoming multi-millionaires from the same crypto you invested in, and you say to yourself hey if he can do it. Maybe i can too, all your friends tell you to hold this and that you, don’t want to miss out.
They’re. Putting in the work group chat that dogecoin is supposedly going to the moon, and when we’re all at one dollar, we can then celebrate and collect our profit and have drinks together now, even though you had more than doubled your money.
In this example, you decide to stick it out because of the phenomenon known as F-O-M-O or fear of missing out you, don’t want to miss out on a potential upside that all your peers are involved. In now, fomo has destroyed a ton of new investors because it is so predictable, more experienced investors, larger whales, hodlers and technical analysis.
Traders are all playing on new investor greed and they know how to leverage it. When you’re deep in the money, it can be pretty hard to make the right decisions, and this is why preparing an exit strategy in advance will help you to really think past the emotions and not left losing any of your investment at all.
So the first most popular and well-known method to set and exit is to prepare a limit on a loss and profit at certain price targets. This is what we call a limit order where you can prematurely decide when your crypto will automatically be bought or sold at a specific price point.
Just as another example to make this easy to understand, say i bought into ethereum at a price of two thousand dollars. A few weeks ago, when ethereum hits my target price of what could be three thousand dollars, i can create a limit order to sell when it hits that specific price target.
The benefit of this is that the order will remain open until the price limit is hit, or you decide to cancel it. This means if your crypto happens, to hit three thousand dollars overnight. While you’re sleeping, you can still rest assure that your profit has been locked in setting an order.
Limit is just as easy as buying crypto, but the real difficulty lies in knowing what your price target for that order is actually going to be. So i believe the proper exit strategy in setting that limit is dependent on two main variables.
So one of those variables is the amount you’re, psychologically, okay, taking back home with, and the second variable is understanding the market cap and the fundamental reason why you believe that crypto is not at the price target you’ve set.
So i grew up playing rugby for close to eight years now and within those amazing eight years. I learned a lot of very important lessons that can translate into this content lesson right here. So in sports there’s, a saying: offense wins games, but defense wins championships.
I always believed as important as it was to score and put points on the board. It was better to have a stronger defense that would allow for more opportunities to open up as an investor. If you just focus on what the upside can be, you may not survive a small correction or even a crash, because you simply were not prepared and your defense was not well built.
When i’m trading in the stock market or cryptocurrency market, i think of my wins as if i’m playing a sport, you get in the zone the flow state with your research and have a mix between a well-shaped, offense and Reliable defense to create that strong defense, you can really do two things
- Hold on to dear life
- Start: shaving profits off the table when you start seeing green.
So the defensive aspect of investing really doesn’t, get as much love as the offense, but it’s so important, if not even more important. So you can protect yourself from any huge market volatility or even the end of this bullish cycle, just as you can set by order through limit trades, you can also create stop loss orders to ensure that you limit your losses automatically the downside to stop losses are That they can trigger an unnecessary sale during huge, short-term market volatility, but it’s still great for anyone who is already very profitable and have already passed their satisfied exit point.
I think of a stop-loss order as a free insurance policy, and it allows the decision of making any process to be really free of those emotional influences. The most common issue that i see is that people tend to really just fall in love with their investments, and this creates a false sense of belief that a certain position may never ever go down, but we all know that is not the case, although traditionally stop-loss Orders are looked of as a way to prevent losses.
You can use this tool to lock in additional profits as a tool in your exit strategy for that defensive side. So now that you understand two very important tools for beginner investors, what is really going to be a viable strategy to find the most amount of success in the crypto market for the year 2021.
So first of all, here are my thoughts. I don’t believe this bull run is gonna slow down anytime soon. But i do believe when we approach fall and this winter we will begin to see corrections and the retracement of this cycle, which veteran enthusiasts call the crypto winter.
So that is going to come at some point before we approach those days. What you can really do is ask yourself this question: how much do i want to make from crypto and and guys don’t, say a million dollars or something that is not actually possible with your size of an investment, but really ask yourself what Price, do i see bitcoin ethereum or some of these other cryptocurrencies that i’m holding and what’s, a good profit for me to take and be happy with? It can be a pretty hard question to answer and it may take a lot more time to know what that may be, but in the meantime you can also implement other strategies.
If you really don’t know what that end goal is going to be, so here are some of those exit strategies that i wanted to share with you. This one is super important. This is something i reiterate on my channel a lot, and this is dollar cost averaging out, so this is literally the opposite of dollar cost averaging your investment in where, for any of my new beginners.
This is where you invest on a recurring basis into a certain stock or crypto position. So say you have a thousand dollars and instead of dumping, that into a random coin, if you ever found yourself dividing that thousand dollars up into equal sums and slowly investing it into multiple smaller investments, spaced out over a regular interval.
That means your dollar cost averaging. In this strategy allows investors to avoid making the mistake of poorly timing the market, especially during high volatility like we see in crypto, so when dollar cost averaging your money out, like i said you just do the opposite of that, and you slowly start withdrawing that money Out of your position on a regular basis until you withdraw your entire investment out and you collect the profits attached.
So there is a downside to this, and that is that you’re, going to experience more transaction fees and while you mitigate the risk, you also reduce the ability to have higher rewards. I do believe this strategy is great for anyone who needs their investment back as soon as possible, but also wants to maximize every green day before fully committing to taking out their entire investment.
Now the next strategy that we’re gonna talk about is called playing with house money. So if you have ever gone to a casino and say, as an example gambled twenty dollars, if you won ten dollars back and had a total of thirty dollars, you could then pocket your initial investment.
So you don’t. Take any losses on your own money and play with what we know called house money in behavioral, finance and psychology. There have been studies that show a loss of a hundred dollars hurts much more than a gain of the same amount feels good.
So what this means is that people are more willing to take risks with house money than they are with their own cheddar, to avoid that pain and still chase the comparably small dopamine of the reward. This type of research is fascinating because it can really help us figure out why we do the things we do as an investor and why certain patterns and behaviors are so predictable.
If you are a new investor and you hate losing money, that’s completely okay, it is ingrained in our dna to feel this way and in order to combat this and to prevent what the world of gambling calls a tilted player, you can always Consider taking out your initial investment out of the trade and use your profits to continue scaling up oftentimes doing this newer investors will be more reckless with house money because they know it’s technically, not coming from their own pocket.
However, in a bull market like we’re in right now, a mindset of abundance could set you up for much higher rewards because you are more likely to take that risk. So here’s. What i plan on doing in this market, i will always keep 10 to 20 minimum of my crypto portfolio, regardless of whatever winter comes.
I’m holding this long term through thick and thin because i truly believe in crypto, and i know that in the long term run, this is still gonna reap me, a higher roi in the next five to ten years. That crypto is going to sit in a cold storage wallet.
Like my ledger, Nano x. This is the one piece of equipment. I highly recommend every single one of my riders to pick up. If you don’t, have cold storage wallet, get that right.
So for the rest of my portfolio, not the 10 to 20 that i’m, always gonna hold. I’m gonna slowly start averaging out my investments during the fall of this year through more advanced technical analysis and patterns.
When the time comes, i’m looking at two things. So first is the realistic final market cap that ties into the potential crypto price target that i’ve set for myself. What market price means is when we look at some of these crypto currencies like dogecoin, and we see that it’s being valued way more than some of these traditional companies that been around for decades, you have to start questioning what the roof is On this, you have to question how much higher the potential of the volume for the market can really be now.
The second method is to implement a determined strategy that i set in liquidating my assets. So if we use bitcoin as an example and say i hold a hundred thousand dollars of it right now, if i see we’re approaching my price target of a hundred thousand dollars, i’m, going to begin averaging out in 10.
Increments of my positions about 20 before it hits my target so 20 before the 100,000 price target that i have for bitcoin would be around 80,000. So what this means is if we get to the 80 000 mark. This is 20 before my price target.
For bitcoin, that’s when i’m, going to start taking out those 10 increments of this initial investment until i begin to offload it completely when it gets to that hundred thousand dollar mark. So i don’t, necessarily always completely sell off when i meet my price targets, because my price targets have always been generally very conservative by nature, so i always try to at least take my initial investment out right.
So if i put in a hundred thousand dollars into bitcoin um, when bitcoin was trading at fifty thousand dollars, it went up to a hundred thousand dollars, so it doubled the money i’ll, make sure i take out at least a hundred thousand dollars.
Twenty percent before bitcoin hits that final price target, so i know it kind of sounds a little confusing twenty percent. Eighty percent. Your exit strategy does not have to be this complicated at all.
To be honest, you can just buy and sell when you think you made enough profit, especially in the type of bull market, that we’re in right now. However, if you’re, trying to be more methodical about your exit strategy and you begin to build better habits as an investor, this is gonna, be more bulletproof to any type of unseen event, like a random flash crash that we’ve had or something that people just wouldn’t think would happen so guys do your own research.
So you don’t miss an upload and if you want to know what i hold in my entire crypto portfolio, i got line graphs, heat maps, a watch list, my buying trade alerts.