One of the key factors that differentiate successful cryptocurrency traders from unprofitable ones is knowing when to make a profit.
It is necessary to have a strategy before entering a position in order to know when to make a profit.
Tell yourself, as well:
Why do you still join the trade?
Where do you intend to be taken by this trade?
If the market turns against you, what is your plan?
We'll look at some ideas on how to decide when to take profit in this article.
Cautiously tread
Cryptocurrency volatility is a double-edged sword. With occasional 40-50 percent spikes, most 4-5 percent travel within the span of an hour, something unheard of in conventional markets.
Crypto markets are also much more open because, to start trading, most exchanges do not need a minimum balance.
We end up with a situation in which novice traders can be provided with a life-changing financial opportunity in the form of uncertainty by combining these two main variables, but often beginners fall into the pit of letting their emotions determine their trades.
Controlling our feelings
Take-profit methods will not succeed if the feelings can not be held in check.
Once your benefit goals have been hit, try not to let yourself slip into a routine of waiting for more profits.
During the 2017 bull rally, we saw the implications of this sort of mentality. There are many tales of traders who sat without taking benefit from huge gains.
Some traders saw their holdings dwindle as markets changed.
Keep your feelings under control, make a plan and stick to it.
A benefit plan take-away
Some individuals like to exit their entire place at once, while others tend to exit orders over a variety of prices on the ladder.
It's important to always set a stop loss order if you're in the above category, to avoid losing all your gains.
Here's an example of how a stop loss order can be set:
You could set a stop loss order at break-even (3,300 USD) to avoid losing cash if you reach a 1 BTC long position at 3,300 USD and leave 50 percent of the position at 4,000 USD for 350 USD of benefit.
Later on, you have the option to close the original order entirely if you see BTC beginning to decline. You will guarantee you won't lose money on an already profitable trade by setting a stop loss order at break-even.
When do I make a profit?
In certain situations, technological research will address the question of when to take income.
Here are a few tactics that will help you decide when to call it a day to close a spot.
Watch for inconsistencies
A perfect instrument for seeking profitable entry and exit rates is the divergence between market behavior and the relative strength index (RSI).
Pay attention to the levels and pivot points of the Fibonacci
At least to some degree, Bitcoin and the remaining crypto markets are affected by automated trading bots and algorithms. This business condition continues to boost prices to the level of Fibonacci.
As a trader, you can take advantage of Fibonacci levels by paying close attention, especially during retracements.
In most situations, there will be some kind of reaction from various levels of Fibonacci, which will provide you with a temporary pool of liquidity to close a position and make profit.
