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When to Sell Your Crypto and the Importance of Setting Targets
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Perhaps one of the most asked questions in cryptocurrency even for veteran traders is when do I sell?
The problem is not a lot of people can show you how to do the right thing. They might give you all the stats, some predictions, a couple of pointers you want to hear, but none of which would be the answer you need.
It’s almost impossible to know exactly when to sell your crypto and how much because if someone did, they would have taken over the market. Besides, if they knew when to sell, they'd be unlikely to ever provide you with that information.
One reason for all this is knowing when to sell isn’t about the action. Rather, it is a set of implications. Some of them include knowing your goals and setting targets and understanding charts. The key is having the answers to these elements would provide you with clarity when deciding to sell.
This article will guide you through the process of decision making and hopefully, you’d be able to lay a firm grasp on your portfolio.
The Broader Scale of Things
Selling coins isn’t an exclusive mechanic to crypto. People have been buying and selling stuff for profit everywhere since the beginning of time.
Nowadays, it’s common practice to buy and sell stocks. You invest in a company when it’s doing well or ditch it when the CEO messes up. But when a stock reaches its peak, you’re left with two options: sell it and get away with the money or wait and see if it goes even higher. Those who failed at this step were often unable to decide what they wanted out of their investments.
For example, if you invested in Toys R Us back in the 1960s, you would have made sizable gains in the 1990s when the company was at its peak. People who sold their stocks at that point got away with great money. Those who didn’t either believed in something higher or couldn’t decide what to do. They paid the price in the early 2000s when the company started to decline. There were some investors who held on for another decade before everything collapsed in 2017. Those guys were true believers but, unfortunately, the stock market doesn’t pay you in faith.
You don’t even have to be a stock trader to understand the importance of letting things go. Most of us have probably run a garage sale at some point, and selling crypto isn’t much different from that. You hold on to something for as long as you can and then, when the time comes, you consign it to someone else who sees more value in it.
The point is every one of us has a general sense of when to get rid of things. Combine that sense with technical knowledge and deep research and you’re already halfway there.
To set targets you must know your overall goals. What do you want out of your investment? Some people are in it for the long haul while others just want to catch a small break. Knowing where you stand helps make the decision a lot easier and quicker.
The next thing you need to decide is how much is enough. For those investing long term, this number is often insignificant. They would ride through the peaks and troughs of the crypto before even thinking about selling. These are the guys who would buy every dip and remain unfazed on every price bubble. If you’re not one of those guys, then it would help to know how much profit you want to get away with.
There are two things you want to consider: your initial investment and how much time you have to see an ROI (return on investment).
For example, let’s say you bought one BTC in 2011 when it was at $1. Two months later, the price went up to $32. If you sell now, you’d make a 3,200% profit - an incredible average return. However, when putting your initial investment into the equation, you’ve only made about thirty dollars. For casual traders, most would be pretty happy with the number, but those with more at stake have a choice to make. You could take what you can and invest in something else or wait and hope for an even higher peak.
This decision gets harder the more you’ve invested. Suppose you bought 1,000 BTC and not just one, your percentage is the same but you’ve now made over $30,000. If you don’t sell and it bubbles, you lose everything. But if you sell too soon and it keeps going up, you’d also lose out.
Investors should always prepare for when things go the other direction as it eventually will.
There is a tool on the crypto exchange that will automatically close the trade when your coin reaches a certain low. Ironically, people are often much clearer on how much they’re willing to lose than what they hope to win.
Experienced traders tend to hover around 1% of their bankroll, meaning they are willing to risk that much at any given time. That doesn’t seem a lot, but when your bankroll is $1 million or more, the numbers start to add up.
If you’re on the lower end of the budget spectrum and manage to keep it at a level that has no impact on your income, you might save a lot of headaches that could come from this area.
Whether you trade for fun or for a living, there are always hard choices in cryptocurrency. You may not make the right choice every time, but it’s important to make them without regret. Clarity comes a long way even when the results aren’t in your favor.
Remember to start slow and have a target in mind. Doing extensive research also helps but ultimately, you’re the only one who decides when to sell your crypto.
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