How to Take Profits in a Bull
Posted On August 7, 2020
Disclaimer: This is not financial advice. This is what I personally do to lock in gains.
One of the hardest things to do in crypto is take profits. How do I know? Well, let’s just say 2017 taught me a few lessons. In a bull run, there’s nothing quite like the euphoria that you feel when your bag continues to increase in value. It feels like it’s never going to stop, but it will and it does, it always does. I learned some hard lessons in 2017. I’m ashamed to say how much unrealized gains I left on the table, because I couldn’t pull the trigger. I saw this happening to a number of my friends as well. Most of us who enter this space are not traders. Traders understood what to do from day one.
Ever since learning the hard lessons in 2017, I use my stop-limits religiously. A stop–limit order triggers the submission of a limit order, once the asset reaches, or breaks through, a specified stop price. A stop–limit order consists of two prices: the stop price and the limit price. The stop price is the price that activates the limit order and is based on the last trade price. Before trading you want to have a gameplan or you will end up figuring things out on the run and missing opportunities. Even if you don’t set stop-limits, use alerts. Bottom line, know where you want to sell. i should also say, don’t get greedy.
For instance, say I bought 500 Chainlink at $10 = $5,000. You could set the first stop at $10.26 and limit at $10.25. You’ve now locked in 2.5% profit or $125. A good way to do this as to not miss a parabolic take off is to stagger the sell orders. Setup stop-limits to sell 25% of holdings four different times. This way you can ensure gains are made.
This is just one way to do things. You would also want to know if the price dips to an area you want to sell, so you can set stops for that as well or use alerts. Basically, don’t be blind, use stop-limits and alerts. I’m no expert for sure, but these basic things have helped me. If you follow some of the Twitter traders, there’s much more robust ways to do this, but for the layman, this works pretty good.