When it comes to investing in cryptocurrency something which expert investors like Robert Testagrossa will tell you is the importance of taking out profits. The main reason behind this is that crypto is just so volatile and that means you could be way up one day and way down the next. Taking profits is about risk management and protecting your assets so that no matter what happens, you will always ensure that you are on a firm financial footing.
What many people are not sure about is how to take profits and when to take them out, and this is because it can be scary to take some money out, if the price of your portfolio then rises. Here are some tips on doing just this.
The 10% Rule
The ten percent rule is the best option for all new investors and it is basically about taking out 10% of your portfolio when things are going well. The best way for you to identify when the right time is, would be to simply set goals for yourself. Let’s say that your portfolio is currently worth $45,000, make a decision that at $50,000 you will take out 10%. If you do like the look of the market then you could even opt to take out 8% instead. The key is managing this risk and ensuring that you actually take some out.
Why Take The Profit?
There are two main reasons that you take profit here. The first reason is that you then have fiat which keeps you comfortable, and the second reason is that you are going to be able to have some cash to reinvest if things take a heavy dip. This is just good practice and it is what all investors do, at least those who are looking to make long term money.
Where Do You Take Profit To?
The reason why so many are in crypto for the long haul is that they firmly believe that it is the future of money and the future of finance. The problem that this then presents is where do you take the crypto out to, if you no longer really believe in fiat? The answer depends on what exactly you wish to do with your profit. If for example you wish to spend it now, then fiat is of course the smart choice. If you firmly believe in the future of crypto then perhaps consider taking your profit out to BNB or to BTC. Alternatively, something which most people do, is take the profit out in stable coins. These are crypto coins which are pegged to the dollar and they will always move in the same direction as the greenback does. This currently seems to be the most common option for those who are looking to take out some of their profits, and it also keeps it within the crypto world.
Always remember that your portfolio is worthless unless you have hit the sell button.