Those who did not manage to get out of bitcoin at the moment when it stormed the historical maximum, lost part of their potential earnings. Experienced traders told how to determine the right moment to take profit and what rules must be followed
Since the beginning of autumn, the cryptocurrency market has shown significant growth. Bitcoin has risen in price by 77% since September. Ethereum and XRP showed similar results. However, in recent days, the price of digital assets has been declining. On December 8, BTC made its third unsuccessful attempt to take the $ 20K level, and has since dropped to $ 17.7K.
It is important for cryptocurrency holders who have earned on the growth of its value not to miss out on profits. To fix it, you must follow several rules. Private trader Alexander Boyarintsev spoke about them.
Sell in parts. It is worth dividing the purchased coins into several parts and selling them as the price rises, says private trader Alexander Boyarintsev. There can be from three to five parts. According to the expert, this approach allows you to increase your potential profit.
Define goals in advance . It is important for an investor not only to buy an asset, but also to determine in advance the goal - to what price he is going to hold a position, Boyarintsev advises. You can start taking profits by selling cryptocurrency when the price approaches the set goal.
“One of my rules, confirmed by experience, is that it happens that you are lucky, and in a very short period of time the transaction brought 60-80% of the profit. Then I go out. This is a proven mechanism. It is better to earn 10 times $ 5 thousand than a year to wait for $ 100 thousand, which you can never expect, "- said the trader.
Use stop losses . Boyarintsev also recommended special orders that allow you to automatically sell an asset if its price dropped below a given value. For example, if you bought a coin at $ 1 and it went up to $ 2, you can place a stop loss at $ 1.5. If the price falls below this mark, the exchange will automatically sell the asset. Boyarintsev suggested placing such orders and moving them up as the cryptocurrency rate grows.
Set take profit. In addition to stop-losses, you can set take-profit in advance, advises Cryptorg.exchange CEO Andrey Podolyan. In other words, when an investor has bought an asset, he can immediately place an order to sell it at a certain rate.
Invest a comfortable amount. Podolyan added that you should invest in a cryptocurrency a comfortable amount for yourself, so that this does not affect the emotional state.
“We must try to keep the volume of the transaction comfortable for ourselves, which does not put pressure on the psyche and allows you to sleep peacefully. If the volume of the transaction is small, then you can do without a stop loss at all. This strategy is inherent mainly to long-term investors and it appeals to me, ”he said.
Nikolay Klenov, a financial analyst at the investment company Raison Asset Management, believes that each investor should have his own strategy, but general rules can be followed. One of them is that the take profit must be at least three times higher than the stop loss order . Five times better, the expert specified, but this is possible primarily on long horizons.
“Stop-loss should not be neglected,” Klenov stressed.
News background. From his point of view, the decision to close a position may depend on the circumstances. For example, if a negative background appears around an asset, it is most likely best to exit it completely. If the background is positive and the price has reached the investor's target level, only part of the asset can be sold, Klenov said.
Monitor market sentiment. Max Krupyshev, CEO of Coinspaid, suggested focusing on investor sentiment in order to find the right moment for taking profit, this is one of the key indicators for determining the market trend. It is important to feel how market participants assess the prospects for a particular cryptocurrency or the market as a whole. For this purpose, various services will help, Krupyshev said.
For example, the Twitter bot Whale Alert allows you to track transactions carried out by major players. If they send coins to exchanges, it can be assumed that it is for the purpose of selling. Another option is to use bots that determine the degree of mention of the project in social networks, Krupyshev added. He recommends keeping an eye on the "fear and greed index" developed by alternative.me. This tool allows you to suggest what investors are more inclined to buy or sell.