Collecting Profits, My Trading Strategyššŗ
Mistakes were made in 2017 & 90% of the time my lessons derived from emotions. Profits/Losses are not real until you sell, what keeps us from sellingā¦greedā¦fearā¦emotions.
Every investment opportunity requires research as the foundation of any trading/investing strategy. With that being said, this blog will be focusing more on the trading psychology aspect (how to respond).
Blessing in Disguise
I remember downloading the Coinbase app back in the summer of ā13, right after high school graduation. At the time I was only 17 and wasnāt legally allowed to trade/invest stocks. I continued to watch the price until October when I turned 18, and the rest is history. Fast forward to 2016, Coinbase adds Ethereum. This was my greatest lesson, and I had no idea at the timeā¦
Watching your money grow daily can surely be addicting, and this was my state of mind with Ethereum in 2016 going into 2017. Little did I know how early I was into the blockchain/crypto space. Iām watching Ethereum go from $10 to $15, $20, $30, I haven't seen money grow this fast and then find resistance. THE LESSON: You may have heard the saying the longer you play the chance of losing increases exponentially (The Casino Effect). At the end of the day the whales/banks/etc whatever you want to call them; win. Why, because just like the casino in crypto the longer you hold an asset the possibility of losing increases.
Trusting You Analysis (Fundamental & Technical)
Letās get something out of the way; admit you are not perfect. Looking for the perfect bottom/top is a waste of time. It causes nothing but stress and drains you emotionally which will affect you long-term.
Scenario
Your project is down 10ā30% and you begin to worry if it will continue to drop. Other projects are moving to the upside, others are setting new athās. Donāt panic trust your research, not your emotions. Look at your research, and check the status of the project. Why isnāt it moving, is progress still being made, find the reasons it is not moving up. Continue to accumulate slow, going all-in is never a good idea for a couple of reasons. Split what you have you invest into small buys. The long-term picture I am painting is to establish my positions and not panic sell.
Taking Profit
Personally, I see (2) types of selling:
- Selling to take profit from gains.
- Selling to buy the same or something at a discount
The real question is when?
To be honest, there is no simple solution, there are too many variables to include. You can lose by selling too early or selling too late, the window of opportunity is small. Many people fomoāed back into projects that they previously had collected profits from. An example is shown below:
Remember the market is always right, never forget that. You can be invested in a solid project at the wrong time and vice versa, understand where we are in the market cycle. Taking profits slowly just like slowly averaging in is also another idea. You have probably have heard or seen āThe Wall Street Cheat Sheet (Psychology of a Market Cycle)ā
The funny thing about this sheet that many do not notice is the cycle is neverending. It is a never-ending cycle that starts and ends with disbelief. This would mean that price is now heading towards its opportunity to sell and we should be arriving within in the next 4ā8months.
Accumulating in Steps/Selling in Steps
Like I mentioned before just like I slowly average into projects, I slowly average out when taking a profit. This part may be subjective for everyone but an example would be to sell 15-20% of your bag every time the price decides to move up. I think it's safe to say if your project gives you anything more than a 2x it's probably a good idea to start thinking about taking some profit. Especially when market conditions are extreme.
In 2018 I held onto bags for too long expecting them to bounce.
Being 100% transparent this crumbled my spirit and motivation for crypto. Then I remembered why I got involved with cryptocurrencies in the first place. Since then I try and find the silver lining in every situation, bear markets means everything is on sale.
Trading or Investing
Something I get asked a lot is when do I plan to sell, or what are my targets. Well, that depends on whether I am trading or investing in something. My personal definition of trading is being in and out of a project within a month. Investing for me is anything longer than that timeframe, with that being said that means I have (2) separate bags for my different trading & investing personalties. My trading bags are projects that keep me in the game and have consistent volume/liquidity (BTC/ETH/LINK/BNB/LTC), my investing bag includes smaller cap projects with long-term potential ( I am not worried about these, I buy blood). My investing bag would include projects like (DOT/ADA/CEL/ALGO/UTK/OCEAN), I try to accumulate a bag of each. Like I mentioned before your bag size should be what you can afford to lose. When trading/investing thinking of that money as being gone and you are not able to access it. Detach all emotions from that capital. If you can only invest $100 then 50% goes to trading and 50% goes to your long-term projects.
Example 1: $50 is invested into LTC, price moves up 15ā20%, take those $60 and invest it into another solid project. This can be repeated, or you can even split that bag 50ā50 and invest in (2) projects. There are plenty of options.
Summary
- Fundamentals and Technical Analysis are important, however trading psychology and understanding your emotions are more play a bigger role.
- Separate your capital into (2) bags trading āshort-termā & investing ālong-termā
- The longer you hold an investment the chances of losing increase exponentially.
- Trust your research, you are not your emotions.
- Understand where we are in the market cycle. There are times to be cool and there are times to take some profit.
- Average in/Average out. Itās not real until you take some profit.
- Find the silver lining in every situation and play it to your advantage.
I hope this helps I know trading has been an emotional roller coaster for me, that has put me in good and bad spots. I do believe crypto will ultimately succeed, however, a lot of the technology is a little too advance and we are in the now so we will have to wait for the rest of the world to catch up. DYOR and accumulate!
Experienced and Written By young crypto wolfš
šFor any further questions you can find me on Telegram:
Discussion Channel: https://t.me/youngcryptow0lfš
