|With the market currently in a down trend the question of when to sell is on many people’s minds at exactly the wrong time. Today I wanted to discuss when to sell your cryptocurrency and when not to sell your cryptocurrency. This one simple thing is what will separate the winners from the losers in this market. So, let’s dive into some important points to consider before clicking the sell button.|
- Regret theory is something I like to talk about when considering clicking on the sell button. What would you regret more? Selling and then your coin goes on to do another 10X meaning you missed out on gains, or not selling and then watching your coin dump by 60 or 70%? This can be a useful guide when thinking of selling.
- Fundamentals, simple question for you, have the fundamentals changed on your investment. If so, then what has changed, and is it a deal breaker for you? If the fundamentals have not changed, then is it possible that you are simply changing your opinion on the fundamentals because the price is down? This can be dangerous. If the fundamentals are still the same, the chances are it is not the time to be selling, but it is the time to be buying.
Selling at a loss is ok. There I said it. BUT there is a major caveat. I only sell at a loss when I have changed my opinion on a coin. That can happen for a variety of reasons, including missed deadlines, hacks, or horrific technicals. This has happened to me with a few different coins over time, and that is ok. Sometimes things changed back for the better and those coins went on to pump, sometimes they crashed into oblivion. Rarely have I regretted cutting a loser. Each one was a valuable lesson. Bonus: You can often get a tax write off when selling a loser.
- Laddering is an effective strategy for taking profits. There are a million and one possible scenarios for laddering out of a position. Let me give you an example. You buy Litecoin at $50. Then it pumps to $100, you sell 20%. Then it pumps to $200, you sell another 20%. It pumps to $400 you sell another 20%. It pumps to $800 you sell another 20%. So basically, you are taking profits every time Litecoin doubles. Now you may say, “But Lark if the price is going to $800, then why sell any at $100?” This is a good question. The answer is because we do not know the future. We are simply managing our risk.
- Protecting your capital is key! I almost always pull out my initial capital from an altcoin when it pumps. I’m not an oracle, but I’m pretty decent as risk management. I know that when I have pulled my capital back out of an investment that it is not a worry-free bag. I don’t need to stress about losing my money because I already took my invested capital out. All I’m looking at now is higher or lower profits. I literally can’t lose when I have taken my capital out.
- The ballet of emotions that you will experience investing can really screw you up. When greed is high and everyone is screaming new paradigm of money, only up, and posting pictures of designer watches and lambos then watch out because a correction is coming. The times of high greed are when the smart money is selling and everyone is else is buying. The exact opposite happens when the market corrects. Everyone starts saying stuff like this is a scam, going to 0, selling now before it falls further, etc. etc. Times of high fear are when many inexperienced investors who bought the top will sell at a loss. This is when the smart money is buying. You can either dine with the whales or be whale food. Don’t follow the crowd