What’s your profit-taking strategy?

I saw a great post by [u/pacrimbeer]( in another sub, and it made me realize I don’t have a great profit-taking strategy. I’m a basic hodler, but I’m reevaluating my [non] strategy after reading his post.

[Post Tl;dr]( – A simple–yet powerful–strategy can be defined as a function of your risk; for example, P = 2 x R. Based on a portfolio of $10K and a risk of 2%, you should take profits when you make $400. 400 = 2 x (10,000 * .02). Something as simple as this will help you know when to wisely take profits and mitigate your risk exposure.

Honestly, there is too much good information for a tl;dr to do it justice. Recommend a read.

What is your exit or profit-taking strategy?

What do you think?

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  1. I don’t plan to take profits on BTC or ETH. I believe the value will increase and money can be borrowed against them.

    If there’s something you believe in, I dont agree it makes sense to take profits. If you are just day trading I guess that’s one strategy.

  2. I am hodling long term as I feel the value still has 10-100x potential. Could I make money timing local tops, selling, and buying back in? Maybe, but I could also sell right before the price goes parabolic.

    Profit taking is more a day traders mentality. Which I don’t think you should do.

  3. ETH is not a trading vehicle to me. I will never ever sell my ETH. I will eventually borrow against them using Maker, but even then only a little bit. Most of it will continue to earn staking income. It is important to realise ETH is about to become a slightly deflationary asset once EIP1559 turns on, and since we are probably going to see a bit of inflation pick up in the global economy, I do not want my financial assets anywhere else. Furthermore I believe an ETH validator will one day cost you a million dollars, implying an ETH price of about 31k. That could be another 5 years away. The point is, where else can I see another 10x gain over 5 years while earning passive income? The only other 10x I can see happening is global M2 supply.

    Edit: with that said I’m happily trading, taking profits, on any coin which isn’t ETH

  4. If the price halves you lose half of your investment. If it doubles you earn less than half of the new value because of the tax burden. Guessing market movements is already a coin toss, tax makes me want to try doing so even less.

  5. Hold and stake. If I’m betting on ETH going to 20K and higher within 5 years. I’m likely going to lose more taking profits along the way, and trying to trade, then I am just holding and staking.

    Only way I’m taking profits is if I see an investment opportunity that I believe can get me greater returns and the desire to hold it through ups and downs.

    As of this moment, there is no other investment I am as confident in as ETH over the next 5 years.

  6. Take out your initial investment. Even if you DCA in, you can still easily take out your initial investment after a few good run ups. Rinse and repeat.

    Once you have a sizable investment, take out ‘life changing chunk’ after a huge run up and invest it in less risky place (stocks, real estate) anything to gain diversification of risk away from crypto.

    Build up cash reserves during bear markets.

  7. Don’t risk more than you can afford to lose. If you have 10 ETH and a decent emergency fund, no reason to sell unless you have an incident. But if you have 100 ETH and nothing in the bank, sell a bit.

  8. I basically view my crypto portfolio as a hedge against catastrophic inflation before I view it as a profit-source. It makes no sense to take a profit into fiat and pay taxes only for that fiat to lose value to a shock of inflation. It just doesn’t make sense.

    As such, the supermajority of my crypto portfolio is forever HODL. I do intend to sell the BTC and a fair number of my altcoins I own at some point because I’m sure ETH will flip it eventually.

    I did some figuring when I was starting to buy crypto back in August of last year and concluded that ETH’s future post-bull run market price is probably going to settle in between $3K and $6K (in 2019 dollars). The way the Federal Reserve has printed insane amounts of money for quantitative easing makes me leery about cashing out to fiat. Yes, I know the majority of that money is locked in bonds and other illiquid purchases, but this also loads up the inflation to happen all at once rather than spread across time.

    I think the smart play is to HODL all the way through the bull run and only take profits to reclaim invested capital or to pay for hard assets or needs.

  9. Alchemix will have ETH collateral available in its v2 release (not sure of the timing). So my current plan is to deposit ETH, borrow alETH at 0% interest, swap that for DAI, and deposit the DAI into Yearn’s v2 DAI vault. The main downside is you can’t earn interest on the ETH while it’s locked in Alchemix, but maybe they’ll find a way to change that.

    Either way, this allows you to “take profit” without actually selling your ETH holdings.

  10. I think it’s normally better just to hodl, but if it gets to the point where you have made it (e.g. $1M value or however you define that) then sell approx 1% per month. If the value doubles then sell about 2% per month, etc. If you think your holdings are way overvalued and can get out then maybe sell a lot more.

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