Trading: Exiting a Trade

In the last post, I talked about how important getting good entries are to trades. Exiting a trade properly is also important. How you exit a trade will depend on a few things:

  • How good your entry was
  • How the chart has developed
  • What your profit goals are for the coin
  • What remaining news the coin has in the near future

Most of my trades are catalyst trades, meaning that the coins I buy have big events coming up. Depending on the event, the price may actually dump on the day of, so be very wary of that. I like to unload some of my purchased coin within 24 hours of the event actually happening. Again, this depends on what the event actually is. The anticipation and buildup to the event will always drive the price up. My favorite strategy is selling to cover my investment. A lot of you will hear me on social media talking about this, but won’t understand what I’m saying.

Let’s use an example. I purchase .1 BTC for $1300 at a rate of $13000USD/BTC. The next day, BTC goes to $16000USD/BTC. So, my .1 BTC that I purchased yesterday is now worth $1600. I could sell everything right now and take the USD profit. However, BTC is an asset that I am bullish on, so I want to keep some of it. I think it’s going to keep going up, so I want to leave some skin in the game. So what I would do in this situation is sell enough BTC to cover my original $1300 purchase, and keep the rest of my BTC to benefit from the price rising. This way, if I’m wrong about the price rise, I am still guaranteed profit. If I am right, I still make profit.

I use this strategy with almost every coin I buy, unless I am doing very quick short-term day trading on the fly. I’m going to go over one more example.

A few days ago, I purchased a coin called ClearPoll (POLL) at the price .0001 BTC for .1 BTC. Today, it is double the price: .0002 BTC. My investment is now worth .2 BTC. So what I will do is sell half of my POLL to cover my original investment of .1 BTC, and let the rest of it increase in value (or decrease, doesn’t matter since I have already secured my original investment back). Because I know that POLL still has events coming up, I want to make sure that I still have some coins in case it pumps more.

Another strategy that I use occasionally is to set my profit goals ahead of time and take scheduled profits along the way. For example, If I entered a trade and set my profit goal at 50%, I might take profits at 15%, 25%, and 35% before reaching my actual goal and selling the remainder of what I have. Taking profits along the way is helpful and can even help you hone your TA skills by allowing you to pick good spots to take profits. Spotting a good time to take profits is just as artful as picking a good spot to enter a trade. If the 4 hour, 1 hour RSIs are both at the top and the price is near a resistance, that’s a good time to take profits. If you’re in an altcoin and you think BTC is about to pump, that’s a good time to take profits. If the coin is pumping hard on good news but is clearly unsustainable, that’s a good time to take profits.

Getting a feel for how the market is moving really is something that can only be taught by watching them move. A lot of times I will watch a chart for hours and not act until I feel confident in pulling the trigger. You have to apply the same focus to your exits. Believe me, there is almost no worse feeling than missing an exit and then watching your coin get dumped to hell. To know that you were in the profit but didn’t take it because you didn’t spot an exit or you got greedy is terrible. That brings me to my next point. Never, ever be ashamed of taking profits too early. Do not get down on yourself because you took a 20% profit and then the coin pumped 100%. Sometimes in crypto, stuff just happens that way. Sometimes a coin will pump with absolutely no explanation. That’s just how it goes. Thinking about the profits that could have been will just eat you inside. Instead, think about how you did the right thing. You did the thing that professional traders do and you secured your profits.

If you are still following along, good for you. Crypto changed my life and through this trading strategy it could change yours as well. I have found these methods to be incredibly sound and each day they keep working I feel more secure in my future and my ability to trade these markets. Keep watching charts, prices, and reading everything you can about crypto. Practice trades by writing down your entries and exits in a notebook and calculating your hypothetical profit.

Tomorrow I’ll be going over some risk management practices and also giving you a look into my portfolio and what it’s comprised of. Hope you enjoy!