Both Bitcoin and the cryptocurrency market, in general, have been undergoing highs and lows several times since they came into existence back in 2009. Though each time the market dipped it quickly made up by the peak following soon after. However, when the market slumps, it brings a lot of stress and worries with it that are shared by both amateurs as well as seasoned traders.
The crypto market is evolving and as with any developing market, it is important to have set strategies in place to make progress. This applies to experienced traders as well who may not necessarily be familiar with the new and fast-changing market such as crypto. Therefore, it is best to make an informed decision about when to buy or sell an asset/token.
It is highly unlikely to find a single, fool-proof method that works in all situations. Everyone has different trading styles and requirements, thus, the best approach is to take into account the various factors that can affect your investments before taking a trade call.
When do I take out a profit?
As we mentioned above, it is not a good idea to look for a one-size-fits-all kind of a strategy as we never really know how the market would actually behave. This is perhaps why most market experts would ask you to stick to HODLing and invest for a longer term. When making a profit is your aim to sell a crypto asset, you must learn to assess the potential of the asset value and how much it can grow.
If you feel like a particular coin could bring in big returns in the long run, you should definitely invest in it and hold on to it until the conditions are favourable. Learn the tricks to optimize your profit. This can be done by looking at making small gains consistently. This way, if the market falls dramatically, the damage to your portfolio could still be manageable.
Say you keep about 20-30% of your gains and set it aside to further investments. These profits can then be accumulated and used to buy other tokens that have just started showing an upward movement. If done consistently, these will grow into a large and valuable portfolio that would boost your overall earnings.
We would strongly suggest not following the trends blindly after being swayed away by FOMO (fear of missing out) or FUD (fear, uncertainty, and doubt). Do your own research and trade accordingly.
Tactics and strategies
Here are some sound strategies that can help you make good trading calls even when the market is tumbling so you can keep earning. This should help you avoid, hasty decisions made emotionally and not thoughtfully:
- FOMO & FUD could make you curious:
To be able to make good trade calls, you have to be well aware of the latest trends and factors that can affect the cryptocurrency market. But an information overload is something you must be wary of. Particularly when the market is in a bad state, it is just too easy to feel overwhelmed and make poor trading decisions driven by emotions. FOMO (fear of missing out) and FUD (fear, uncertainty, and doubt) are some crypto jargons that warn you against being overcome by trends and emotions.
FUD implies that there is some uncertainty in the market that has perhaps stemmed from a doubt, bad news or a public personality putting forward their reluctance about the market. The impact of this could lead to a fall in the prices as most investors would then find it wiser to sell their assets if the price is likely to fall further.
Here’s what you might want to do instead: Learn to read the market and its trends. Predicting the market’s future accurately every single time is impossible for even the top financial pundits. Hence, it is best to enter the market armed with your own research so you can draw your own conclusions. Remember that FUD and FOMO could even occur when certain investors or crypto influencers deliberately try to steer the market in a different direction.
- Plan ahead and avoid putting all your eggs in one basket
You may have the best asset in the world that has a proven track record of bringing monumental gains. Yet, you must not ever invest all your money in it. To be on the safer side, make it a practice to not invest more money than you can afford to lose. It can be mentally taxing to watch the price of crypto tumbling down when you’re expecting it to bring profit.
Diversify your portfolio–no one can really tell which asset or token would start bringing more returns at what time. Therefore, rather than investing a majority of your funds on one asset, have a diverse portfolio and put your money on different crypto products that you wish to perhaps hold for long. Remember that the cryptocurrency market is notoriously volatile and hence, as in any financial trading market, you must have very clear entry and exit points.
- Have a long-term vision- HODL
You may have come across a popular saying that goes, “it’s not a loss until you sell”. Well, it might not be entirely true but it surely indicates something worth your attention. Say you buy an asset and its price falls, what you incur is only an unrealized loss which would translate into a real loss if you actually sell the asset for a lower price than what you paid.
In the case of Bitcoin which is currently experiencing a bearish trend, this cryptocurrency has consistently maintained an upward movement. If you look at its past trends, every time the Bitcoin value came down, it soon recovered quickly due to factors such as scarcity.
A lot of people are of the opinion that the value of cryptocurrencies like Bitcoin will appreciate in the future due to their scarce nature. Thus, if you stay in the market for long enough, the short-term shifts in value would not affect your investment negatively.