A Take Profit Strategy
Some people like to exit their entire position at once, while others prefer to ladder exit orders across a range of prices.
If youre in the latter group, its important to always set a stop loss order to prevent losing all your gains.
Heres an example of how to set a stop loss order:
If you enter a 1 BTC long position at 3,300 USD and exit 50% of the position at 4,000 USD for 350 USD of profit, you could set a stop loss order at break-even to prevent losing money.
Later on, if you see BTC starting to weaken, you have the option to close the original order completely. By setting a stop loss order at break-even, you can ensure you wont lose money on an already profitable trade.
Paying Attention To Fibonacci Levels
The crypto market, by its very nature, also tends to push prices to Fibonacci levels. If you pay close attention to these levels, especially concerning retracements, youll gain the hometown advantage when it comes to cryptos.
Remember that crypto markets are, to some extent, influenced by algorithms and automated trading bots. This market environment tends to push prices to Fibonacci levels.
In most cases, there will be some reaction as a result of different Fibonacci levels. This can provide a temporary liquidity pool for you to close a position and take profit.
In addition to Fibonacci levels, its also common to see price reactions at pivot points.
How To Take Profit In Crypto
What Is the Reason To Use A Take Profit Order in Crypto
For those who actively manage their crypto portfolios, the take profit order type offers a very convenient way to take advantage of trading opportunities in these volatile cryptocurrency markets.; For example, suppose a trader has a long-term thesis that Solana is likely to be a serious competitor to Ethereum, due to its performant design, and acquires a long position in Solana.;;
Despite overall long bias towards Solana, the trader may anticipate that short-term volatility of Solana price is likely to take place in the near future and result in large, temporary down moves. In this case, it’s may make sense for a trader to set a take profit order at a certain price reasonably higher than the entry price, take the profit when it’s possible to do so, and then re-enter the long term position at a lower price.
How Does Cove Markets Implement Take Profit Orders
Cove Markets makes the process of entering a take profit order for cryptocurrencies very simple with a Take Profit order type.;;You need to choose whether you want a Take Profit limit order or a market order.; The difference is that a limit order requires entering a price which will be used as a reference for determination of profit.; A market order will just use the current market price.;;
All you need to do in order to use the take profit order type, is to; create an account with Cove Markets and start placing take profit orders.
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How Are Cryptocurrencies Stored
Cryptocurrencies are stored using wallets, these wallets dont actually store your crypto, instead it saves your private keys, which proves that you are the owner of the crypto coins.
Crypto wallets come in many different forms, the exchanges mentioned above all have built-in wallets to store your crypto after purchasing.;
Different types of crypto wallets include:
Private keys are stored on the exchange where you buy your crypto, allowing you to easily trade, buy and sell your crypto coins.;
If you are trading, buying or selling multiple different cryptocurrencies, leaving them on a trusted exchange is okay.;
This is especially true if you hold exchange coins which can earn you rewards for trading and keeping your crypto on their platforms
Private keys are stored on physical devices that look like USB sticks. Ledger is the best choice for a hardware wallet.;
They encrypt and store your private keys offline for maximum security. If you are holding your crypto for the long term this is the best choice.
Keys are stored inside software or apps, allowing you to easily send and receive crypto.;
Exodus is the best choice for software wallets, they have wallets for desktop, iOs and Android devices.
These are keys written on a piece of paper which can be stored in a safe place. Before the creation of hardware wallets, this was a good way of storing your coins long term.;
Can We Actually Time The Top
In an ideal world, we’d be able to “time the top” of the market. We’d know exactly when it hits the peak, sell and max out the ROIROI stands for Return on Investment. It’s simple, really. If you invest money into an asset, you are doing so with the h… .
In the real world, that’s impossible.
Truth is, a very small percentage of people will sell just at the right time. And even those people will have just lucked out.
Truth is, we’re all now looking at it. The market is much bigger than last time. And we’re all looking for…. what?
Everybody is expecting this big, parabolic run-up and then a big crash.
If everybody is expecting that, it is less likely to actually do it.
I mean, we shall see. It could indeed do exactly that. It just seems to me that if we’re all looking at the same charts and expecting the same things, it isn’t as likely. The moment that thing starts to increase quickly, there’s going to be a bunch of crypto people with PTSD from 2018 who go in and “take profits”. The end result is that… maybe we don’t get that big parabolic move for quite some time. If ever.
So, we just have no idea what the hell is going to happen.
And given this, it is too easy to just sit there and hold and always think another parabolic rise in price is right around the corner. Until… it isn’t.
Point is… the next bear market isn’t going to begin with big red flashy signs.
It is going to start slow.
You won’t see it coming.
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You Pay Less In Taxes And Fees
There are a couple of extra costs when selling crypto within a year. The big one is short-term capital gains tax.
Whenever you make a profit selling or exchanging a cryptocurrency, the amount you earn is capital gains. The IRS requires that you report capital gains and pay taxes on them. You pay either short-term or long-term capital gains tax, depending on whether you held the crypto for more than one year. Short-term capital gains are taxed as part of your income. Long-term capital gains have lower tax rates.
If you keep your crypto for longer than a year, then you pay less in taxes when you sell it, because it will be considered a long-term capital gain. You also don’t need to pay any taxes on it until you sell. Those 65% of consumers who sell crypto within a year end up paying more in taxes.
In addition, you need to pay transaction fees when you sell crypto. These aren’t too expensive with the best cryptocurrency apps and exchanges, but they’re still a cost you pay for selling. By limiting how often you sell crypto, you pay less fees.
Selling crypto within a year isn’t always a bad decision. For example, if something changes and you no longer think a crypto is a good bet, then selling it could be the right decision.
Be On The Lookout For Divergence
Divergence between price action and relative strength index is a great tool for finding profitable entry and exit prices. The 4-hour ETH/USD chart below shows an example of divergence between the price action and RSI.
In this theoretical situation, lets say you enter a long position after A.
At the next price peak, B, RSI also makes a higher high. This means there is strong buy-side momentum that is driving price upward a good sign.
C could be a good place to sell part of your position and set a stop loss order at break-even. At C, price retests the resistance level formed by the previous high with a steep drop on the RSI. After a period of consolidation, Ethereum makes one final wave upward to 164 USD.
In this case, D could be the place to close out the majority of your position. Even with the nearly 20 USD move to the upside, ETH registered a lower high on the RSI indicator a bearish signal.
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Nobody Has Ever Lost Money From Taking Profits
In trading, this is my favorite rule.
If you read my blogs you know I buy coins gradually. I have long learned that guessing the bottom is impossible. So, if I like a coin/project I buy, lets say, $50 every two days over a period of time. This way, I get a nice buying average.
When the coin goes up and I am in the profits I start selling slowly. And with every sell, I earn profits.
Of course, you will sell to early most of the time . But because you don’t sell everything you always have some left if the price keeps rising. That only means more profits. It’s a good thing.
It’s simply impossible to guess the top.
The money I earn from selling I reinvest in other projects or keep in dollars if I dont know what to do with it at that moment.
This strategy has worked well for me. I now own a nice diversified crypto Portfolio. And with the amazing rise of crypto this month I have been smiling.
So, dont be afraid to take profits to reinvest or keep money on the side-lines.
Its just a smart thing to do.
- Past Payouts $27.30, 0.00 TRX
- – Author $22.51, 0.00 TRX
Why You Need An Exit Strategy
A result of holding a specific coin for too long can result in massive losses, evenwhen the price used to be way above the entry price. Let me give you an example. If you decided to buy a cryptocurrency in January, and theprices happens to jump up with 20%, you might think that selling is the way togo. However, all of your friends have decided to hold the coin. Meaning, you would be the only one missing out ifthe coin decided to moon . This phenomenon is also known asThe-Fear-of-Missing-Out , a mistake many investors make while trading.After happily looking at your portfolio, you decide to hold the coin for another 2 months. Within these 2 months theprice of your investment has turned south, and the price has suffered a massive -50% reduction. Meaning yourinvestment is now worth less than it originally was. What now? Do you sell and take the loss? Or do you hold andwait for a price recovery? Who knows, the coin may never return to its all-time high.As you can see choices like this could have been avoided if you had an exit strategy in the first place. If youdecided to sell your assets when the price rose with 20%, you would have madesignificant gains. This is why you need to really think about a solid exit strategy. Below you will find the top 4most used exit strategies in cryptocurrency.
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Keeping Your Eyes Open For Divergence
What is divergence? The disagreement between the indicator and price. It can have significant implications when it comes to trade management.
The amount of agreement or disagreement proves relative. As a result, dont be surprised if you recognize several different patterns that evolve in the relationship between price and the indicator.
To make momentum analysis valid, price swings must be of sufficient strength. For this reason, momentum is useful in active trends. But its not helpful with range conditions where price swings prove variable and limited.
When does divergence in an uptrend occur? When the price skyrockets, but the indicator does not. Divergence happens when the price decreases, yet the indicator doesnt reflect the downtrend.
Theres a higher probability of a price retracement when divergence is recognized. Ultimately, divergence can assist the trader in recognizing and reacting appropriately to a change in price action.
It indicates change and means the trader must decide whether its tightening the stop-loss or taking a profit. Your ability to recognize divergence will contribute to increased profitability.
How? By alerting the trader to protect profits.
Perks Pitfalls And Strategies Of Trading Cryptocurrency
Perks of Trading: Cryptocurrency is insanely volatile. In Forex 2% gains are a blue moon event, in the stock market 2% gains are a real score, in crypto trading 2% gains are something that you can see 5 minutes after hitting the buy button . There are lots of opportunities to see big gains and losses in crypto. If you can learn to take advantage of the gains, you will outpace a HODLer very quickly under most market conditionsif.
How to trade the right way: Even an inexperienced trader has the potential to outperform a HODLer, but to do this they have to put aside emotions and have patience. Here, a trader will act as if they are a HODLer, averaging into positions and HOLDing. However, they will then average out of those positions once they have profits or once the price starts heading on a downward trajectory. Stop losses, profit-taking, and averaging out of positions can help to avoid many of the risks of HODLing, but of course, these tactics present their own risks as well. A major risk of being willing to cut losses and take profits is taking small but consistent gains and missing parts of runs . If the market is bullish, try to stay away from trading too much unless you really know your stuff , in a stagnant or bear market, or when it comes time to take profits, trading can be your friend. Most of all though, find a trading style that works for you, and make sure to employ proper risk management tactics!
Where To Buy Cryptocurrency
Buying cryptocurrency is actually simple, you just need to sign up to a cryptocurrency exchange, verify your identity, then choose a cryptocurrency to buy.
Cryptocurrency exchanges are platforms where you can buy and store multiple cryptocurrencies using your card or bank transfers.;
Theres two types of exchanges well look at in this guide.;
The first type are cash based exchanges where you mainly buy and sell cryptocurrencies for cash. Youll use these exchanges for buying cryptocurrencies directly and selling them for cash that you can withdraw to your bank account.
The second type is a crypto based exchange where you mainly use Bitcoin , Ethereum and coins like Tether to buy other altcoins.
I recommend signing up to the three exchanges below, so you have the most exposure to different cryptocurrencies.
Take Profit By Selling In Batches
My first approach to taking profit is this:
Divide up my holdings into 4 or more parts, depending on how big the bag is
Determine at what price you’re going to start taking profit. That is your base selling price.
Sell them in batches and at different prices on the way up
Remember the goal is not to sell and cash out into fiat and go on a shopping spree.
The purpose of taking profit is to be able to accumulate more of your favourite coins.
Don’t worry, if you’re patient enough, you will catch that dip that always comes around after a pump.
Percent Of Profit In Cryptocurrency
Ordinary Take Profit works very simply. When the price rises to or above the specified one coin, the crypto exchange, based on your settings, will close the deal. For example, you bought 1 BTC at a price of 10,000 USDT and put Take Profit + 10%, that is, you created the order to sell Bitcoin at a price of 11,000 USDT. For a while, BTC traded within 1000 USDT and then continued to grow.
Upon reaching the level of 11,000 USDT and above, your Pending Order with Take Profit + 10% will be filled and the system will close the trade with a sell. The total profit is 1000 USDT. Take Profit is used in order to get profit on time when there is no desire or opportunity to follow the deal.
What is the optimal percentage to use for deals? Much here, of course, depends on your needs, trading strategy, and money management. The smaller percent of Take Profit, the higher the probability of reaching it in the near future, and the larger percent of Take Profit, therefore, this probability is lower and you need to wait longer.
To earn a lot with a small percent of Take Profit, you will have to open a lot of deals and close them quickly. Conversely, if you set a large percent of Take Profit and wait for a long time, you can earn a big one profit. Scalper traders usually focus on minutes timeframes and use Take Profits from 0.3 to 1%. Traders who trade intraday on hourly or 4 hours timeframes and set Take Profit from 1% to 3%.
Cryptocurrency Investing For Dummies
In Case A, Mr. Investor decides that he wants to benefit from a potential long-term rise in price of several cryptocurrencies: Bitcoin, Ethereum, Ripple, Litecoin, and Monero. He invests equally in all of them, with a total investment of $5,000, while understanding that it is a very risky investment, and that he might lose all or almost all that amount. He opens an account with a cryptocurrency exchange where all these currencies can be bought and sold, deposits $5,000, and then purchases $1,000 worth of each of the currencies at their current market value. He pays a commission of 5% on these purchases to the exchange, which he accepts as the cost of doing business. He plans to cash out his entire investment in 2 years no matter its value and will cash out the investment in any single currency which rises in value by 1,000% before the 2-year time limit is reached. He checks his portfolio on a weekly basis and tries not to think or it or worry about it, accepting its value will fluctuate strongly.
Mr. Investor does not want to be a trader, for several reasons: he wants to deal in Monero, which is not offered by any major brokerages now. He also has a long-term time frame and does not want to spend much time managing his investment. A few minutes each week is all he will need to be a long-term investor.