You Won't Get A Profit In Selling Until You Use It In Buying

April 20, 2021

Many new traders thought that they can get profit from selling. But that's not really the case, because even if you sell it at a higher price, the amount of your asset is still the same. But you will start gaining profit, once you buy more assets from the money you've got from selling.

I know it's a understandable, but many are still NOOB here and still don't totally understand the whole process.

Well, just think of it this way...

For example, you sold your BCH at $1200. Yes, you got a profit since the selling price is higher than the buying price. BUT, you lost your 1BCH since you sold them, so it's not a real profit.

But if you use the $1200 in buying BCH at $900, then your 1BCH will become 1.3333BCH, and that's the real profit. You were able to accumulate 0.3333 BCH which is worth $333 if base on a $1000 BCH price. So the 0.333 BCH ($333) is your real profit, not the money you've got from selling.

So that is how we get profit in Spot Trading. If you are new here and still don't know how to spot trade, then this is a hint for you.

To avoid being FOMO or having losses, always remember the "SELL HIGH, BUY LOW" principle.

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If you buy BCH at $900 then sell it at $1000 or higher, then rebuy at $900-950 or lower to gain profit. You can't rebuy at a price higher than $900 because you will only lose your profit. But in some cases, (just like some of my trades 🤣), I rebought assets with the price higher than the selling price because the asset's price rapidly goes up, and is impossible to drop to my target buying price anymore.

This usually happens when you early sell an asset, just like what happened last bull market. Many have sold their BCH at $800-900 prices not expecting that it will go higher than $1000. So the BCH they have sold at for example $820 cannot be rebuy at $800 anymore since the lowest support was $806 and it rapidly goes up right away and maintained the $850-900 support level. (I am actually referring to myself 🤣)

But to avoid big losses, in case the price of the asset is impossible to go down to your target price anymore, then it is much better to rebuy at your selling price like if you sold at $820 then rebuy at $820 or $850. At least, the losses are smaller compared to the ones you'll get once BCH maintains its support level at $1000.

You can also use the technique called Dollar-cost averaging (DCA) or the technique by dividing the total amount to be invested across the target assets to reduce the impact of volatility.

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You can also apply this by just using the profit you've got to buy assets and retaining the capital.

For example,

You bought 1BCH at $900 and sell it at $1000 so you gained $100 from it.

The next time you rebuy, just use the $100 to buy BCH instead of the whole $1000. In this way, your $900 worth of BCH is safe in case the market suffers from a sudden swing.

Because we can't really tell what would be the exact resistance to sell an asset, or exact support to buy an asset. So much better to secure your capital and let it float on the blockchain to generate more gains once the market pumps again. For more info about the DCA technique, visit Eybyoung's article about it.

Another way to generate more profit during a bull market, and even in a bear market is through the Retracement method.

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Retracements are the small dip during the bull market and the small spike during the bear market. The trend is not going up all the time in the bull market, or going down all the time in the bear market. So that small spike and small dip allow traders to buy more or sell more and generate more profit.

It's just simple, during the bull market, buy on the small dips, and sell again at a higher price. If you do this multiple times, then you will generate more profit. This also saves you from a market crash. There will be times that the trend will spike in a short while, so take that chance to sell your asset during the bear market. Then buy again once the trend goes dipper.

This method is actually for the experts and for those who know how to read the TA. Because if you don't know TA, your trades won't be successful.

So here are my trades last bull market. My profit was actually so small since I early sell at prices, $820,$830,$880, and $1100.

• Sold 0.25512 BCH at $820 and 0.37998 BCH ay $830, with a total of 0.6351 BCH. Then rebuy 0.63119 BCH at $830.

In this case, I've got 0.00391 BCH loss since I rebuy at $830 price. The BCH price seems like it won't go down to $800 anymore since the lowest support at the time of writing was $828. Although there's a small chance to go lower, but I don't want to get that chance because I might regret it later if it doesn't happen. So it's better to get small losses than a bigger one if BCH regains its track.

• Next was, sold 0.25 BCH at $1100 and rebuy at $1050. My 0.25 BCH became 0.2677 BCH so I gained 0.0177 BCH.

• Then sold again my 0.26163 BCH at $1100 and rebuy at $1075. It became 0.2677 BCH so I gained 0.00607 BCH.

As you can see, I only gained a small profit here because I did not expect the price to go lower than $1000. But it's better to take small profits than get bigger losses.

So the total profit I've got was only 0.02377 BCH less the 0.00391 BCH loss equal to 0.01986 BCH only.

But good thing I have swapped some in my Bitcoin.com wallet. (Btw, I have posted the wrong screenshots about this on noise.cash 🤦‍♀️. I based my calculations on my ss while swapping, not thinking that the amount will change once you execute it since the price is volatile). So here's the exact info:

I swapped 0.11236283 BCH + 0.19452447 BCH at different live prices, a total of 0.3068873 BCH, then swapped back 0.34289579 BCH when the price was $850 something, so I earned 0.03600849 BCH.

The total profit I have earned in Binance trading and Bitcoin.com swapping was only 0.05586849 BCH.

Too small for that huge uptrend since I sold most of my BCH at lower prices. And it's a lesson to learn again. And because of that, I wasn't able to do retracement because my buy order was stuck at $800.

As you can see, my trades aren't that successful but at least I earned a small profit. And in the next uptrend, I know what to do.

Patience is really important in trading, but in my case, I became excited and impatient, so that's what happened.

This is not trading advice since I'm not a pro, yet 😅. So always trade according to your will and don't risk what you cannot afford to lose.

Lead image from https://www.dailyforex.com/forex-articles/2017/11/how-to-profit-from-cryptocurrencies-part-2/85625