Profit Taking Strategies
My Biggest Edge is My Profit Taking Plan.
Many of our friends leave their profits just on screen, but you don't. Today, I want to talk about different approaches to profit-taking strategies that you can utilize in a bull market.
I've noticed many people don't have a clear plan for profit-taking strategies, and it's a huge mistake. Having a solid plan already puts you ahead of 95% of the market players. Working on your plan isn't just about preparing a strict set of actions to follow; it's about teaching yourself to plan, to become a better investor, and to create various strategies that suit your style. A plan isn’t about selling everything right now; it's about having a response for different scenarios. If one thing doesn't happen as expected, you'll move on to another part of the plan, so you can react quickly and re-evaluate. A plan, especially one written in pen on real paper, is your best friend.
So now, let me share some examples from my different portfolios and how my plans look. Let's dive in, my family of bulls.
Your profit-taking plan will vary depending on your portfolio style. Obviously, your strategy for a main portfolio filled with long-term, blue-chip investments throughout a bull market will differ from your strategy for speculative plays that only show promise for now. So, let's start with the profit-taking plan for the main portfolio.
For my main portfolio, my approach is as follows:
I don’t take profits at any specific gains at the moment
I avoid speculative selling now to buy back lower
As long as my conviction that the bull run will continue holds, I hold
I keep an eye on the macro situation, such as a potential future recession
I'm watching all the signs that we're going to be approaching the top of the bull run
Based on the market situation, I'm starting to take profits early enough, especially at certain levels
I plan to take profits of 10% - 20% every week or at every significant price increase
If the state of the market suddenly changes, I am prepared to take more out
I don't need to catch the precise peak, instead my profit will be averaged out thanks to reverse DCA
For other plays, my profit-taking plan is more cautious:
For low market cap plays, early projects, and speculations, I have different strategies based on how much I believe in the project's long-term potential, its team, product, earnings, future plans, and community. Whether they have a product that solves real problems or it’s just a trend I can profit from, the tokenomics of the protocol, and many more factors play a crucial role in deciding which profit-taking strategy I will use.
I’m sharing this because I have in mind a new style of newsletter that I believe will be very valuable for everyone. If all goes well, I believe next week will be the time for the first part of it. These strategies will be included in each series. So, let's look at my other profit-taking strategies:
Strategy 1:
At 1.5x gain, I take out 25% of my deposit
At 2x, another 25% of my deposit
At 2.5x, yet another 25% of my deposit
Finally, at 3x, I withdraw the remaining 25% of my deposit
Strategy 2:
At 2x gain, I withdraw 25% of my deposit
At 2.5x, I take out another 25% of my deposit
At 3x, I withdraw the 50% of my deposit
Strategy 3:
At 2.5x gain, I take out 50% of my deposit
Then, at 3x, I withdraw the remaining 50% of my deposit
Strategy 4:
At 3x gain, I take out 100% of my deposit
Strategy 5:
I take out 10-20% of the total position every time I double my investment
Strategy 6:
At 3x gain, I take 50% of the total position
At 5x gain, another 50% of the total position
At 7x, take out another 50% of the total position, and so on
At some point, I take a significant part of the position if I feel it's enough for me, but I always leave a "moonbag," especially if I still have conviction in the project. Only in case, if I lose my complete conviction, I close the entire position. It's important to keep my table clear, without noise, so I don't get distracted.
Why withdraw the deposit?
It puts me in a risk-free zone
Managing emotions becomes much easier, even in a big market crash
It frees up funds to buy during dips or new project launches as new opportunities arise daily.
Why do I have so many different strategies for taking profits?
It's about being able to adapt to how the market evolves. The fact that I've set a specific strategy reminds me every day of the importance of taking profits. I have many assets in my portfolio that I don't even take a deposit from because they are high-conviction plays for me. However, there have been plenty of times I've achieved a 5x return on an asset that recently entered the market, and I ended up closing it at a buy level a few days later, because stop loss on entry is another of my rules in many cases. There's a lot of speculation in narrative trading, where capital flows from one trend to the next, and I certainly don't want to leave capital locked up in one asset, which will then become due in a few months. I aim to be agile, adaptable, and profitable. That's why I'm here.
What next after withdrawing the deposit?
It's time for a reverse DCA strategy, an opportunity to sell progressively on a significant upward move, e.g., 10% of the position. In extreme hype, I might sell even more, e.g., 20% of the position.
If you don't have a plan for collecting profits, it almost always ends in losses. Make your own plan now. This plan is essential for me. I don't want to one day find myself in positions down 90%. I love my rules because they ensure my freedom.
Thank you for reading. I will be very pleased if you support me with your subscription.
Not financial or tax advice. This article is for informational purposes only and should not be construed as tax or financial advice.