Explaine to me profit taking this cycle, please
Explaine to me profit taking this cycle, please
I have been a holder for a couple of years and all that tells you is that I have only seen downside, untill the resent run. I have bought in over the past 2 years and now currently hold a good amount of crypto. I am a long picture person and am not a rush to cash out or have the need to. I always hear about taking profits when the market is up, but not sure how that would look or make sense if I have a 5-10 year time horizion for this investement. I am sure that I am missing something and there is a good reason for taking profits, but I am not sure what it would be.
So in theory, lets say that my holdings got to a $500K valuation. I understand that the pricing can drop 90% during the next down turn, but what if it doesn’t? What if there is only a 30% or 50% drop? I will still be miles ahead of where I was 2 years ago.
Sorry if these are dumbass questions, but I am seriously having a hard time figuring this one out.
A lot of people get “star struck” by their gains and blindly ride the rocket without having proper risk management. Believing in a coin/project and taking profit from it can be mutually exclusive. A big rule of thumb I’ve always believed in is sell half at a double up and sell percentages as you see gains nX from there. There is no rule that says that once you do this, you can’t reinvest when the prices come down, after all if you believe in that coin/project they are just on sale at that point! Be fearful when everyone else is greedy, and greedy whenever everyone else is fearful.
The reason to take profits is because at some point it won’t just be a 20-30% drop followed by a bigger gain; at some point it will be an 80-90% drop and you won’t even know how it happened and you’ll be stuck holding a negative bag for years. Eventually most people give up and sell. Hence “buy high sell low.”
All depends on your outlook or how much you believe in any given coin, but the market, aside from maybe Bitcoin, is speculative and not really meant for DCAing long term (by long term I’m talking 15-30+ years.) altcoin pump and dump in cycles but there’s no guarantee we’ll see what we saw in 2021.