Investing

Crytpo Profit Taking Strategy

  • Last Updated:
  • Aug 6th, 2021 6:32 am
[OP]
Newbie
Sep 29, 2019
47 posts
6 upvotes

Crytpo Profit Taking Strategy

Hey crypto experts!

I'm relatively new to the crypto world and have learned a lot over the last few months. I'm of the belief that this bull market is going to run to around the end of the year with BTC reaching somewhere around 100k.

My question is around profit taking and what strategies people use to prepare for a bear market. I know the best advice people will always give you, whether it's crypto or stocks, is to secure your profits along the way. But if everything in crypto is tied to the price of BTC, is it really securing your profits if say for example one of your alt coins does a 3x and you then take out half of it and move those profits into another alt coin?

If the majority of projects can't hold their value through a BTC crash, then isn't the only way to secure profits to move it out of crypto altogether (or into a stable coin) and wait for the inevitable BTC crash to buy back in?

I'm not opposed to that strategy by any means, but isn't that attempting to time the market? Which is usually not a winning strategy for retail investors. I feel like I'm drastically limiting my potential gains if I'm always moving my profits out of crypto instead of reinvesting them.

Anyway, just looking for advice on how people handle their profit taking strategies since I don't want to get wrecked when the bear market comes.

Thanks!
1 reply
Deal Fanatic
User avatar
Dec 14, 2010
6896 posts
8911 upvotes
My setup is to have 2 approaches, a “trading” strategy, focused on short term, and an “investing” strategy, focused on long term.

The trading strategy locks profits to stablecoins. It only buys btc when there’s confirmed momentum (based on a bot that I wrote), and when fundamentals for btc are bullish (improved network metrics to confirm demand growth). This enables you to increase gains at a fiat level, since you go to and from btc and dollar. No outperformance of btc in bull market, but great capital protection on a bear market, since it holds stablecoins.

The investing strategy starts in btc and always holds btc as the base coin. It switchs to alt coins when there’s confirmed momentum on them outperforming btc. To lock profits, it goes back to btc until another setup like that is found. It’s considered investing because the main holding here is btc, which is meant to long term, so this is just a strategy to accumulate more btc via trading. You increase gains at btc level, since you go from alts to btc. I use the same momentum bot, just pairing alts with btc instead. Great outperformance in bull market, while holding btc in a bear market. Huge volatility when looking at what represents in dollar value, but this strategy is not meant for that, since this is an investing one.

On my case I trade in DeFi, via options and farming income with the alts that I am holding, but you can do that on any smaller exchange if you are in Ontario or bigger exchanges if you are outside of Ontario.

Having a script that ensures consistency on trade was key for me, since not every trade is profitable. But if you have a good strategy to confirm momentum, it will have more wins than losses, so it’s profitable in the long run. Risk management is key to ensure that the extreme emotions (greed and fear) don’t get in the way.


Rod
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