Learning about how to trade cryptocurrencies is just one part of the equation. A good trader should also know how to take crypto profits. Do you hold onto your assets for as long as possible? Or do you withdraw and reinvest into new cryptos? The choice isn’t easy and can make or break your investment. There are many people who invest in crypto every day, but not everyone will leave with big profits.
When you withdraw, most platforms allow you to take it out in cash or other cryptocurrencies. You can even withdraw to crypto debit cards, which you can use as a normal debit card anywhere.
When should you be taking profits in crypto
The truth is that there is no one-track strategy as to when you should withdraw your profits. It all depends on what trading game you’re playing and what cryptos you are holding. For example, if you’re a scalping trader, you keep making small profits consistently throughout the day. You move your money around multiple cryptocurrencies by reinvesting in rising cryptos.
Here’s our crypto taking profit strategy:
- If you’re in it for the long haul then hold on to your cryptos for as long as possible. Long-term investing is a recommended strategy that is easier to keep up with and can gain a lot of profit. However, you need to have done proper research on which coin you’re investing in. If it isn’t long-term crypto, you will lose out.
- Don’t sell unless you know where you’re going to reinvest. Cryptocurrency trading isn’t a one-off game where you make large profits from one or two transactions. When taking profit in crypto, always ensure you have your next moves ready.
- Don’t always focus on hitting big. Unlike software or a bot, there is no way a person can always be monitoring the markets to know the perfect time to buy/sell. Focus on making smaller profits and growing your portfolio and experience. Crypto trading involves a lot of trades over a period of time.
- Make use of crypto profit sharing. This is where you allow professional traders to invest for you. You only have to pay them once you have made a profit from your trades. It’s a win-win situation for everyone.
4 strategies to maximize taking profits in crypto
1. Diversify your portfolio
The cryptocurrency market is highly volatile. If you hold your entire investment in one currency, you are taking a major risk. That value could go belly up in a span of a few hours and you’d lost your entire investment. The best way to take profits in crypto and mitigate this risk is to spread your investment. Even if one crypto is declining, other profits will cover up for it.
2. Hold your cryptocurrencies
As we have seen from popular cryptocurrencies such as Bitcoin, holding can give you a lot of value. The general consensus is that prices that are dropping tend to recover over time. Of course, this isn’t true of every crypto, but it does apply to many. Also, when you hold for the long term, you won’t be affected by price fluctuations. If you’re a day trader and make quick sales, price drops are a real problem. But, if you’re holding for years, these fluctuations become inconsequential.
3. Do loads of research before you invest all profits in crypto
You shouldn’t copy some half-baked strategy that someone online claimed works for them. If you aren’t careful, you can some wrong decisions and lose a lot of money. Impulsive decisions are definitely not the way to go. If you aren’t confident in your research abilities, you can still follow other seasoned traders. Using copy trading, you can simply copy their trades to learn what to do with crypto profits.
4. Don’t take decisions based on your emotions
When your money is on the line, it is easy to make wrong decisions based on your fears. This is especially true when a market is spiraling or seeing a downward trend. When other traders are selling off their stocks, you may be compelled to do the same. However, it is always best to stick to your own research and sell only when it really benefits you. Remember, holding your crypto for the long-term makes these fluctuations redeemable.