When & How to Take Profits in Crypto

The million-dollar question is about to get answered, how to take profits in crypto? This is a subject that almost every crypto investor has faced and the truth is that nearly everyone gets it wrong, all the time. It is one of the most important aspects of trade management and if you do not know how and when to take profits on your crypto gains then you are bound to keep giving back the profits when the storm comes. Have you ever experienced your crypto portfolio increasing over a couple of weeks to the point that you start to think about selling some or taking at least some profits just in case? Well, then you are like most other investors in crypto that experience both the bliss of making gains and the dreadful reality of giving them back almost religiously.

In this guide, I will explain to you how I take profits on my digital asset investment and how I keep increasing my portfolio while other investors struggle to keep even half of what they have made in the latest bull run. There is no magical secret to how it’s done, it comes with experience, and there are some great rules you need to follow in order to book your gains and keep them.
To go further on this topic and learn more about crypto valuation, please read our guide on how does cryptocurrency gain value?

Content table

What does taking profits in crypto mean?

Taking profits in crypto means that you sell and lock in your gains for fiat currencies such as USD, EUR, or GBP. This can be done in several ways and there are plenty of different strategies you can use to ensure the best way to take profits on your cryptocurrencies. The reason this is so difficult for many investors is due to FOMO, or fear of missing out. It can be incredibly difficult to sell your coins that have increased 50%, 100%, or even more during the last couple of weeks or months. This happens due to lack of experience and maybe it’s your first time experiencing decent profits from any investment. If that is the case then I highly recommend that you keep reading as I will explain how I do it and how I manage to keep my gains in the long run and reinvest them to make even more profit.

When you take profits in crypto you can either sell your crypto for fiat currencies like USD, EUR, and GBP, or you can sell your coins for a stablecoin that mirrors the price of a fiat currency. By doing this you don’t have to sell your coins and you can keep them on the blockchain for reinvesting or just wait for a better opportunity. Whichever choice you think is better for you I’m sure it will feel good to lock in some gains and feel that you have made a good investment over the past weeks or months.

Taking profits in crypto can also be done automatically through take-profit orders which is a very effective way of locking in your gains. This is a good way to stay on track with your strategy and secure your profits because once you add your take-profit order to the exchange it will get executed automatically. I recommend all traders and investors use this technique if they have a problem with discipline.

Effective profit taking strategy

Every investor employs a different strategy for locking in profits on their digital asset gains, some are good strategies, and others are not. In this part of the guide, I will give you some good tips that you can use when your portfolio has increased by 3x and you are thinking to lock in some of that profit. The most important thing for any investor is to have a strategy and follow it. Without a strategy, you are doomed to fall victim to emotion-based selling which has been proven to be a poor way to manage your portfolio.

Have a plan

If you have lost gains in the past and feel upset over losing several thousands of dollars back to the market just because you didn’t sell at the top, then most likely you don’t even have a plan for when and how to sell your coins in the first place. Always have a plan for how to sell your cryptocurrencies sketched out before you start investing. If you have a solid plan for how to exit the market then you have something to fall back to when the market tops out. Having a strategy is the smallest requirement for any investor.

Take-profit limit order

The take-profit limit order is a great tool that you can use to automatically lock in profits on your investment simply by adding a pre-set limit order to sell your coins at a higher price. Look at the market before you buy your crypto and think about a level that would make you a happy investor. Don’t put it too high because the price might not reach that level ever. Look at previous price movements and try to be within reasonable levels for what could happen.
Once you have added the limit order, leave it. Keep in mind that you are going to be happy if the price reaches this level anytime in the future. Now you have a plan, stick to it. The better you are at reading crypto charts the easiest it will be to time the peaks.

Take profit on a percentage

It is very easy to check previous movements in the cryptocurrency you have invested in and try to replicate these movements and take profit when the market does the same percentage move again. For example, if your coin has had a tendency to move up +80% previously, then simply add a take profit order at +70%. Always undercut a little bit to be sure that you are going to get out. Remember, it might take time for your coins to reach these levels but stick to your idea.

Leave FOMO

The one single factor that scares almost every investor from ever selling their coins is FOMO. FOMO stands for Fear Of Missing Out. Investors get FOMO when prices soar and everyone is making a ton of money and all your friends are up +250% on their portfolio. At this point, you don’t want to be the one to sell everything and miss out on the next +250% that is about to come. Here is the funny part. This is exactly the time to sell your coins. History shows that when everyone is at the peak of excitement, that’s the best time to take profit on your crypto. In order for you to change your result, you first need to change the way you manage your portfolio. Don’t be like the others, leave FOMO, and sell your coins when everyone is overly excited.

Don’t listen to other investors

This is a strategy that I picked up many years ago and I realized that listening to other investors didn’t give me any security because most of my friends lost money, all the time! Only a hand full of investors make consistent gains and those are the people that have independent thinking and don’t listen to others. When you mix your own ideas and emotions with other inputs your judgment gets clouded. This is a poor way of managing your cryptocurrencies and you are bound to make mistakes. So, don’t listen to anyone else regarding the markets or when it’s time to sell, you create your own strategy and follow it.

When to sell your crypto gains?

In order to sell your crypto gains, you need to have balls. It’s true. The only reason you haven’t been able to sell your profits previously is that you didn’t have the courage to sell when everyone is making money. Think about it, if you sold your cryptocurrencies when everyone was making windfall profits you would go against the crowd and you would keep your gains while everyone else sold in panic in the next crash. That’s it, that’s how you get to keep your money and save them for reinvesting later.

Sell at maximum hype

There is a popular quote in the investment scene that goes like this: “The time to buy is when it’s blood in the streets”. The opposite is true for when to sell. When there is euphoria in the market and overly excited investors it’s time to sell. This is contrary to what many investors think but it’s the best way to do it. If you have invested at lower prices and the market spikes up and makes new all-time highs and the general public is in a state of euphoria, then it’s time to unload your cryptocurrencies because the crash is near. A parabolic move to the upside is most often followed by a crash that erases most of the increase.

Sell your crypto in parts

There is an option for those of you who can’t stand to sell your entire bag of coins all at once. Even though that is the best option in most circumstances there is another way. Selling your crypto in parts during a market increase is a good way to take profits and keep what you have made. Selling in batches of 20% at the time is a good way to do it. This will ensure that you lock in at least some gains while still having a foot in the market. It will be as effective as selling half or everything at once but it’s a second best.

Sell different coins at different levels

This is somewhat of an advanced strategy but sometimes it is required of you as an investor to liquidate some coins in your portfolio that is outperforming others. Many altcoin projects have different roadmaps and some of them get hyped at different moments. This can create confusion with investors since most digital asset enthusiasts are used to seeing all coins rise at the same time. However, if one of several of your holdings has increased massively prematurely it’s time to unload these coins and lock in profits.

How to take profits and reinvest

The idea of reinvesting your gains is a very good idea if you know how to do it. There are a couple of things you should know before you reinvest to make sure you reallocate your portfolio in the best way. Simply buying other coins randomly will not cut it, your need a system that holds up and has a proven track record of success. Below are some tips that will put you ahead of the curve.

Reinvest altcoin gains smart

Don’t just blindly put your earned money in another altcoin that has been released on the market. Take part of your profits and invest them in a more stable cryptocurrency in the top 20 that you know has the potential to follow the market for a long time. Then take the other part of your capital and reinvest in some of the other projects that you are currently invested in to increase the positions. This is especially good if these projects haven’t taken off yet and prices are still low. Finally, if you have some capital left you can always reinvest in some coins that you consider more speculative. This investment is valid since you are using the money you earned in a previous investment and most of the capital is already put to work in other places.

Rebalance your portfolio

Rebalancing your portfolio is a great way to take profits on crypto and invest in lower-priced coins. There are several crypto exchanges that offer automatic portfolio allocation such as Coinrule or Shrimpy. These platforms have built-in programs where you can tell the algorithm to sell coins that have increased and buy other coins that are still priced much lower.

Buy the dips

This is an old one but it still holds true. Using your gains to buy the dips is a great way to redistribute your capital. This might take some patience and time but it is definitely worth saving some of the capital from your previous positive investments for when the market pulls back. A dip in the cryptocurrency market is a pullback of at least 20-30%. When the market gives you these opportunities it’s great to have some leftover capital in your account to stock up on extra coins. This is an investment strategy that has been used for decades in traditional finance.

How to take profits in crypto without selling

There is a way of taking profits in crypto without actually selling your coins and leaving the blockchain. It is a common practice that I use all the time when I want to lock in parts of my holdings but I don’t want to withdraw them to fiat money. This is usually a cheaper alternative to converting your cryptocurrencies to cash and will help you out if you are an active investor.

Convert to a stablecoin

Stablecoins are very useful when it comes to profit-taking. A stablecoin is a cryptocurrency that has its price pegged to a fiat currency such as the Dollar or the Euro. The stablecoin will represent the same value as you would have if you withdraw your coins to fiat money, but instead, you can keep them on the blockchain and avoid high withdrawal fees.

Stake your coins

A great way to utilize your stablecoins is to stake them and earn a reward at the same time as you are looking for new investment. Many platforms such as Celsius Network offer high rewards for stablecoins and you can withdraw them at any time you want. Whenever a new opportunity arises, just withdraw your staked coins and invest them again with an even bigger size.

Should you HODL all the time?

There is one option to selling your digital asset every time the market peaks and that is to keep HODLing your coins without touching them. The good thing about this strategy is that you will be sure to follow the market up if you are invested in some of the major cryptocurrencies. The sad part is that you will follow the market down, even when it falls more than -50%. The HODL strategy is good if you can keep adding more funds when the market dips. This way your portfolio will keep growing year in and year out.

HODL for the long-term

If you are going to HODL, make sure you do it for the long term and don’t bail out after a couple of years. The biggest mistake HODLers make is to sell after a couple of years with good gains and then the market falls into a long bear market and they can’t handle the pressure. If you are going to HODL, HODL!

Don’t HODL if you can’t wait

Investors that have an active investment approach should avoid the HODL strategy simply because it won’t last and you will not feel comfortable with it. The people best suited to HODL are those who don’t really care about the immediate returns and can keep their coins locked up for a long time. Any investor that actively follows their portfolio should not HODL. Instead, adopt a more active investment strategy where you get to be more involved with making decisions a couple of times per year.

What other traders ask

The most effective way is to use a take-profit limit order to ensure that you get out of the market at a predetermined price.

One of the best moments to take profits in crypto is when the market is overheated and prices are at a maximum. When prices are the most inflated is usually the moment before a big setdown and that’s when you want to lock in your gains.

If you need the money, yes. If not, keep the profit in a stablecoin on the blockchain for further reinvesting.

This depends on the cryptocurrency you are investing in. Check previous price movements and calculate a percentage that has been reached before. Undercut a little bit to make sure you will hit your target.

It all depends on how involved you want to be in your investments. If you don’t have much experience and just want to have a foot in the game then I would recommend HODL. If you are a more active investor then you can adopt some of the reinvesting strategies mentioned in this article.