“The only people who lose money are the ones that have to sell.”
– Warren Buffett
This, of course, is the holy grail of trading – WHEN to get out of the trade.
We are at the beginning of cryptocurrencies as a technology, so there could be enormous upside potential. We are looking at the maximum upside. If there is one thing I have learned it is that you have to allow your winners to run if you want to make a lot of money. We are definitely holding for the long-term upside potential.
In this bull market and in the Early Adopter stage of cryptocurrencies, I don’t really want to be selling. Why? Unlike other investments, Bitcoin and other cryptocurrencies are currencies and, so if they succeed, you won’t have to sell them to gain value from them. You can use them directly, like you can the British Pound or any other form of currency.
I am not even going to buy something with a stop loss to sell, as the volatility is too huge at the moment. I am not really looking at selling at all, since we are in a bull market and if I get out I will miss out on the big moves that comes when you least expect it.
However, to just buy and hold is a pretty lazy strategy too. You don’t want to be up massively and then lose all the profits you made. So we have to consider taking some profits now and again in order to take money off the table and rotate it back into other cryptos that might be at a lower price. For example, if you are in profit and have made over 100%, it is time to think about setting a stop loss just below it to sell a part of your holdings and take some profit, say 20-30%.
Another way to make money is a little more advanced and it means watching it on a daily basis if you see the price continuously going up and down i.e. going sideways and not really hitting new highs, then you can start to trade within that ‘channel’ of high and low prices. So you are getting in near the bottom and out near the top – in effect trading – whilst always keeping your main amount invested but start trading a smaller portion within that range.
It is important to do this but most people do not do this. If you don’t do this then you don’t make any money while markets go sideways which is crazy when you consider that markets might go sideways for many months, even years on occasions. If you don’t trade the range while waiting for the eventual upturn, you have missed out on that time … and profit.
This is the optimal strategy but takes some experience. Not a lot of experience but a little.
Make sure you talk to one of our traders who can guide you and point you in the right direction.