Most people get hung up while investing in getting in at the best price and out at the worst price. The truth is you're going to miss out on more profits than you'll make by using this method, especially in the cryptocurrency market! Let's take a look at last week. The price of Ethereum dropped down to nearly $200, and kept hovering around $220. I GUARANTEE that a lot of people were waiting for it to drop back down to $200 or lower to get in. What happened? It soared up to $325 in two days, and those people who bought in at $220 made a major profit, while the rest were left in the dust.
The same thing happens with taking profits. Let's take a trip back to the past and the techboom.
image source - http://www.salon.com/2013/09/27/why_we_hate_the_new_tech_boom/
Tech stocks looked like they simply could not fail and were generating 1,000+% returns in months (sound familiar?). Eventually, this growth is just not sustainable and things crashed, a lot of them by more than 90% of their value. It probably felt great for those people to be riding a $1,000 investment to $100,000 or more, but I bet you it felt a lot worse when that same $100,000 investment went back down to the $1,000 they started at.
image source - http://thenudeinvestor.com/stock-market-crashes-are-we-about-to-experience-one-what-history-can-tell-us/
There are a lot of people who are able to retire from Ethereum's appreciation this year. I was talking to one of my friends not too long ago who has made a ridiculous amount off his Ethereum investment, but he was greedy and refused to take profits. He even acknowledged that he should take profits, but just can't see it coming back down! I'll bet he would be the first to say that losing nearly 50% of his net worth in the span of a week was a very tough pill to swallow.
The moral of the story is this - you don't always need to make the perfect trades to be profitable. If you got into a position at $1 and it went to $1.10, you got out, and then it went up to $1.50, give yourself a pat on the back! You made 10% on a trade! Most people don't make that in a year! If you make 10% on a trade every day for a year starting with $1,000 (compounding) you'll end the year with $1,283,305,580,313,380,000. Always analyze your trades and figure out a price at which you're going to buy, and a price at which you're going to sell. While you may miss out in the short term, in the long term this is much more likely to provide you with positive returns.
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As always, this post is not investment advice and should not be used in any investment decisions. I am not a licensed adviser, but rather am providing my own views on the above material for discussion purposes. You should never base your investments off someone else, and instead should do your own research.
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