#058 - A fool proof guide on how to take profit from crypto

A foolproof guide on how to take profit from crypto

But seriously, if you read this newsletter diligently, I will try my best to make sure you don’t f*ck this rally up. 😂

That’s a promise.

If you’ve been through a bull run, you know how exhilarating it can be.

If you’ve never been through the euphoria stage of a bullrun you’re in for a ride you will not forget.

Unfortunately, during the euphoria stage, most investors are so high on their gains that they completely forget to sell.

Then comes the bear market and a massive wave of regret.

That’s why I’m sharing this foolproof guide to profiting from your investments, based on wins and failures throughout two bull runs.

My name is Kierin (Onchain Edge) I write weekly, data-driven insights for crypto investors. Empowering long-term financial growth with onchain and technical analysis. Join 800+ savvy investors.

BTC Onchain Edge Index (current value: 46.32 Medium Risk) Puell Multiple spiked quite a bit in the last 24h.

This guide will help you understand why taking profits is important, and introduce some effective strategies for maximizing your gains while reducing risk.

This guide will not show you how to sell your crypto perfectly at the top.

Why Taking Profits is Important in Crypto

Protecting Your Investment

First, taking profits from your crypto investments helps safeguard your initial capital.

If you manage to take out your initial capital, then in theory, the rest is just casino money.

It will definitely suck if you lose your gains, but at least your initial is safe.

But just taking out your initial capital isn’t enough.

Maximizing Gains

I want to make sure you have the opportunity to build long-term financial wealth.

That will only work if you have a smart way of rebalancing your portfolio throughout market cycles.

Unfortunately, selling in the crypto space is one of the most challenging things to learn. It's too easy to sell too early and miss out on life-changing gains.

When selling, you can take a few different approaches.

There’s no right or wrong way, just the way that works for you.

You can rebalance and take profit in FIAT (USD, CHF, EUR) or other currencies that do not have high inflation. You can also rebalance and take profit from altcoins during their peaks and simply accumulate more Bitcoin.

The first strategy allows you to have cash available to buy back during a bear market.

The second strategy offers the advantage of accumulating more Bitcoin, which is especially beneficial in a country with a high inflation rate.

Strategies for Taking Profits from Crypto

Set-and-forget limit orders

One of the easiest-to-implement strategies is the set and forget limit orders.

The way that this works is super simple, and I recommend that you think about your profit targets when you make your first buy.

It doesn’t matter if it’s for BTC or altcoins.

Here’s the set-and-forget limit orders profit-taking strategy:

1. As soon as you purchase an asset, set realistic price targets for selling a portion of it. For example, you could decide to sell 20% of your holdings each time the asset's value doubles.

2. Set the limit orders with the amount you planned to sell at the respective price points.

3. Forget about this position.

4. The limit orders will sell your positions automatically.

This strategy can be used on any exchange.

It can also be done onchain. Here’s how to do limit orders on binance and on 1inch.io you need to click on “Limit”.

and you can set onchain limit orders at different price levels onchain for up to 3 years.

Now, with some altcoins that don’t have the same fundamental robustness as BTC and ETH, you might want to consider setting some stop-loss price alerts in case the investment doesn’t turn out the way you want.

Using Technical Analysis (2 methods)

There are quite a few ways you can use technical analysis to your advantage so that you can take profit when an asset becomes less bullish.

The easiest technical analysis strategy you can use on higher timeframes is the moving averages MA strategy.

1. Sell Spot on MA Crossover

Here’s the full article for this strategy with the code and an explanation on how to install it: A BTC Moving Average Investing Strategy That Netted $32k 

2. VMC overbought areas on higher time frames

This Indicator is excellent because it combines multiple indicators into one:

➡️ WaveTrend oscillator
➡️ Bearish/Bullish divergences
➡️ MFI (Money Flow Index)

➡️ When the blue wave is in the overbought area

And a red dot 🔴 appears (bearish divergence)

 🔴 = higher chance of a trend shift = higher probability of a reversal

You can read more about this indicator here.

Onchain Analysis

Onchain analysis is my favorite way of taking profits. I’ve written a few articles on this topic.

#055 - Buy Low, Sell High: BTC Investing Without Watching Prices (Onchain Edge Index)

How to Use On-chain Indicators to Predict Market Tops and Bottoms

Accountability Buddy

I don’t think I’ve seen anyone mention this before, but it’s critical.

When you're high from the profits and unable to think clearly, sometimes you just need a wake-up call, to remind you to sell.

Make sure to have an accountability buddy who will ensure that you sell at your profit targets.

You should also establish a penalty of $100 to $1,000 for your friend if you choose not to take profit. This will compel you to make a profit.

Believe me, this is probably one of the best ways to make sure you will actually make a profit.

Otherwise, the risk is too high that you justify yourself out of taking profit.

Got any other suggestions? Send me them by email by responding to this newsletter.