As the cryptocurrency market continues to evolve, even veteran traders must develop a solid strategy – one that informs them of the best time to buy and sell. Many expect to find a “set in stone rule” or magic formula to perfectly time the market and make profits online, but it’s never that easy.
However, there are several suggestions and methods to consider and implement in your financial path. Continue reading to discover more about the many considerations you should have when selling your cryptocurrency and how to maximize your earnings after selling.
HODLing and Taking Profits
Before we discuss when you should take out your crypto profits, let’s get some basics down. First, taking profits is the purposeful decision of selling cryptocurrency or other crypto investment to guarantee gains following a period of appreciation.
Holding is quite the opposite. Usually written as “HODLing,” it entails regular trading and market engagement. The “HODL” in HODLing stands for “hanging on for dear life,” describing a hands-off approach to crypto earnings.
Although this crypto profit-taking approach has helped build wealth for those with unique foresight, it can take even decades to see a big return on investment. Essentially, it requires a lot of planning and patience to execute HODLing strategies properly.
When Should You Cash Out Your Cryptocurrency Profits?
Before reaching a specific price, cryptocurrencies have a variety of peaks and dips. Investors who understand how and when to take crypto gains may profit from these ups and downs and raise their earnings significantly. They often combine HODLing with a DCA investment plan to secure long-term investments.
When should you cash out your crypto for profits? It may seem quite obvious, but you cash in when the time is right. If you want to sell your cryptocurrency to lock in profits, you need to conduct your research to understand the long-term value of different coins. If your research and belief in a coin are high, you should consider HODLing. If it isn’t, you can wait short term and cash in for some gains.
Furthermore, since it’s practically impossible to time the market perfectly, you can focus on optimal profits as you will do when you play games on this website. You don’t need large cash out for every crypto investment. Sometimes, getting those little 30% gains can get you farther than you might have imagined.
Rather than waiting for a 50% or 100% gain, concentrating on a lesser profit percentage increases the likelihood that you will not be caught in a disheartening drop-off. Often 20% and 40% corrections hit the crypto market after a rise; HODLing too long can get you caught up if you’re not confident in your coin.
Most HODLers don’t understand how to benefit from crypto when the time comes because they lack experience and have no reliable crypto profit-taking guidelines to follow. To gauge the right periods for profit-taking, you need to master the markets and turn crypto’s frequent volatility to your advantage. This can be achieved using fundamental and technical analysis of the crypto markets and your favored investments.
Taking gains at the right time will also help you avoid frequent HODL problems, such as purchasing the peaks. Many novice HODL investors make the mistake of purchasing at the tail end of a trend, which means they must endure some stormy market corrections and see their coin drop by at least 30%. This psychological barrier is difficult to overcome for many new investors, and they easily sell at a loss.
Finally, you should sell if you have other investment options more guaranteed to make you money. It’s critical not to succumb to the fear of uncertainty and to miss out.
How To Take Out And Optimize Your Crypto Profits Like a Pro
Now that you have a basic grasp of when you should take in your cryptocurrency earnings, let’s look at how you can do that in the first place. We will go through some techniques that you may use.
Sell a modest portion at a time
To maximize your earnings, sell 5 to 10% first, then keep doing so over time. But note that this depends on the size of your holdings in a specific cryptocurrency. Try selling your crypto investments when they have increased in value by at least 30% since you purchased them.
This method is best suited for collecting your profits due to the crypto market’s volatility. It would be best if you did not sell your entire coin unless it has reached a target price and may not climb any higher.
Buy and sell the dip
You may also think about using strategic trading tactics to realize and optimize gains for coins you believe have long-term worth. For instance, if the price of bitcoin rises, you may consider selling some of it and use the profit to purchase more bitcoin when it falls again. This way, you can have better earnings when the price eventually rises in the future.
Invest your winnings in stablecoins
Another method and reason to take in your profits is to store them in a stablecoin backed by currency reserves. Here, you may utilize them to generate interest by supplying money to DeFi ventures. Moreover, you can also buy other coins with stablecoins without converting your personal cash to crypto.
As previously said, the appropriate trading tactics may help you consistently make money with digital currencies. However, before you even consider collecting gains, you must become accustomed to identifying special crypto signals to understand when to purchase and when not to. The more expertise and knowledge you acquire over time, the better your chances of earning more profits.