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A Beginner’s Guide To Taking Profits and Reinvesting

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A Beginner's Guide To Taking Profits and Reinvesting

While it is hard enough to learn how to trade properly, taking profits on trades might be an even more tricky topic.

One of the biggest problems traders face regardless of skill is losing all of their earned profits to the market again. This often happens right before the market trend reverses and turns the trader’s greens to reds.

Profits turning into losses can happen for several reasons. Some of these reasons can include inexperience, improper risk management, and uncontrolled emotion. 

As with trading, however, knowing when to stop is a smart way to stay afloat and minimize losses.

When To Take Profits

There are no foolproof ways to time the market. Nobody knows exactly when to enter or exit a trade, but there are a few strategies that might make taking profits easier.

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Here are a few pointers you might be able to take advantage of

HODL for Longterm Trades

If you intend to enter a long-term trade, holding coins in a spot trade might be the way to go. Simply buying and holding the cryptocurrencies you’re interested in can be effective if combined with dollar-cost -averaging.

With these two strategies, a trader can hold coins during an uptrend and purchase more during pullbacks. At a satisfactory resistance zone, the trader sells and makes a profit.

Adopt The 30% Rule

Choosing the right strategy that fits your portfolio can be a great way to effectively take profits during trades.

One of such strategies is the 30% rule. This strategy involves selling 30% of your holdings at regular intervals. The 30% rule can be adjusted to fit the size of your trade, depending on how big your portfolio is.

If this strategy is combined with proper take profits, stop losses, and risk management, the trader can be assured of minimal losses, even if market conditions reverse unfavorably.

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Buy The Dip

The crypto market is a highly volatile one. As a result, pullbacks and downtrends occur regularly. Some traders make considerable profits from buying coins cheaper than they normally would, by buying when prices decrease.

With the lower market prices, a trader can make reasonable investments and cash in profits by selling when prices move to the upside.

Staking Some OF Your Earnings

Again, staking is a great way to take money out of the market and make greater profits.

Some traders carry out both trading and staking, allowing them to earn from multiple sources at the same time. Regardless of market conditions, staking the right cryptocurrencies bring back reasonable returns.

Some of these returns can also be used in trades, offsetting your losses and allowing you to add the rest to your profits.

Investing In New Coins

Some high-risk coins also possess significantly high rewards. Knowing which to invest in and therefore profit from might help you to make better gains.

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Some of these coins come in form of ICOs (initial coin offerings). On the success of these coins after buying them, you immediately become an early investor. You can choose to sell these coins when they launch officially, making significant profits in the process.

Put Your Profits Away

The safest way to ensure your profits are safe is to put them away for a while. You can convert them into stablecoins or fiat, and then store them in a wallet or a traditional bank account.

If you make 0.5 bitcoin from trading 5, it might be wise to put your profits of 0.5 BTC away and continue trading with your original margin. Continually saving your profits can help to balance your losses and bring you long-term gains.

 

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Adekunle Joshua is a cryptocurrency writer. He has a deep understanding of the technology and how it can be used to improve the world. James is a strong advocate for using cryptocurrency to make the world a better place. He wants to help people understand the technology and use it to improve their lives.

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