Let's talk about taking profits (might be a little long but I think it can be worth it)
On 04/01/24 I provided you with my macro “taking profits plan”
what my targets are and when, therefore, consider to extracting the majority of capital from the market.
But I want to add something more to the topic, starting from the mental traps that block us from this crucial practice:
•We feel FOMO as we regret not getting in on a coin that keeps rising
• We’re greedy and we don't take profits because we think prices will go up more and never return to previous lows
• We feel the need to be always in position and we’re uncomfortable holding stablecoins, thinking that we’re missing gains and people around us are becoming rich
• Even relief bounces make us greedy, thinking the uptrend will resume so we prefer to hold
• We don't take profits often, so when we do it, we’re feeling bad as it isn't normal (practice the art of small selling from time to time)
• Our friends don’t take profits, instead they talk about how much future developments will impact the price, so we prefer to don't sell
• We feel too much like part of a community so by selling we’re thinking of leaving them alone and not believing in the project anymore
• We don’t have an exit plan
• We lack in technical analysis
These are the common things that usually stop us from achieving our goals.
We can read these mistakes 10 times a day for 365 days, but we will deeply understand them ONLY through experience, and that's why getting rekt is the supreme teacher.
Talking of a more “concrete application" instead, there are different solutions for taking profits:
▫️Reverse DCA ~> Which means that, as you slowly put your capital into assets, you also extract it step by step once things become hot.
A few tips on this method:
• The more aggressive the candle, the more aggressive you must sell it.
• Cut between 10/15% depending on the candle size.
• Once you sell, never look back.
▫️Systems ~> Which means creating iron rules depending on your risk tolerance.
If we assume you start with 1000$, there might be 2 ways:
• Conservative: investment increases 50% ~> $1500 ~> You take out 75% in blue-chip/stable and let your 25% left be your running bag.
• Moderate/Aggressive: investment increases by 100% ~> $2000 ~> You take out 1000$ in blue-chip/stable and keep the other 1000$ invested OR use the 1000$ to split 500$/500$ into 2 plays.
Systems make sure that you'll take profits in a cold way as long as you respect your initial strategy which depends on your risk tolerance.
{ My strategy }
I don't use the above-mentioned practices to take profits, and that's because of my “chartist attitude”.
This means that, apart from specific cases (coins pumping out of the room prematurely) I will evaluate:
• BTC HTF structure
• BTC D. implications
• Retail interest
• OTHERS parabolic move
• Few other metrics
Before taking profits.
On my TP strategy, I will sell at determined levels almost the entirety estimated at 80% while the other 20% will remain as a “moonbag”.
This might be the riskiest method for someone but for me is the one I'm comfortable with the most.
👁️ A few additional and final tips on taking profits 👁️
• There is no single profit-taking strategy that is better than the rest as it comes down to your plan, risk tolerance and skills
• Your goal should be to play one cycle extracting more profits as you can in order to compound them in the next bear market/opportunities ~> less moon, more realistic targets
• Life is short, so reinvest profits and enjoy your life by spending time with loved ones, taking that vacation, and rewarding yourself for your hard work.
• Taking profits does not mean rotating and jumping into new coins, at least not too much so don't dump a coin to chase a new one or you will kill your chance to make money.
