How To Choose the Best Time for Crypto Selling
Knowing the best time for selling digital assets is a crucial ability for individuals who want to have the best results in the crypto space. In this sense, the remarkable rise in the value of Bitcoin in 2021 demonstrates that timing is the best ally of smart traders/investors.
For instance, investors/traders who knew how to hold their crypto assets and sell them at the top in 2018 managed to profit plenty of money, while others that waited a couple of days deciding whether to sell or not lost a significant percentage during the crypto crisis.
Cryptocurrencies are volatile, which means it is crucial to investors/traders to learn when to sell a crypto asset.
2018 Crypto Crisis vs ’90s Dotcom Crisis – What Do We Have to Learn?
Nowadays, cryptocurrencies are so popular that it is even possible to buy Bitcoin with credit card in a matter of seconds. However, as their popularity grows further, many experts believe digital assets will eventually enter a big crisis like the ’90s dot-com boom.
Even though the “crypto bubble” predicted by many critics never happened, the 2018 crypto crisis was considered the industry’s rock bottom moment, especially due to the slow recovery pace and all the investment losses that occurred during the period.
Indeed, a good parallel to the cryptocurrency is the high-tech market during the 1990s, when thousands of individuals bought stocks in internet companies. However, as the value of these companies climbed, investors had to decide whether to hold or sell their stocks.
At that time, the bubble blew away the chances of many investors who put a lot of money in those stocks, and people that did not sell anything lost plenty of money.
This peculiar situation illustrates that crypto investors/traders have to understand their own expectations. Hence, it is crucial to ask yourself when you are investing “what am I willing to lose in this game?”
Once you discover the answer to this question, it is possible to create a framework around your portfolio to increase your ability to absorb losses. Plus, it will give you the ability to set realistic expectations about the level of risk you are willing to handle.
Crypto Trading is War – Deciding When to Sell is Crucial
Although it is possible to forecast cryptocurrency prices on some occasions, investing/trading in crypto markets involves much more than that.
In this sense, crypto trading is similar to a war room, in which you have to use the available information about the field, your strengths, and your weaknesses to tailor a winning strategy.
When deciding when to sell cryptocurrency, you must understand your expectations and goals, defining the amount of time you would like to spend on dashboards and automated tools watching the markets.
Plus, it is important to know how to handle all the tools you have to increase your chances of gains and mitigate the losses. Learning about how crypto exchanges work and the speed at which digital assets go up and down in the order book is another crucial ability. It’s also a good idea to use a decentralized exchange if you want to trade daily because the fees associated with centralized exchanges are typically much higher.
Using Automated Tools When Selling Cryptocurrency
Once an investor has all the information you need, it is time to decide on specific values at which you would want to sell the crypto assets.
Nowadays, crypto exchanges offer several tools that help to increase the chances of success or mitigate losses in transactions involving digital assets, such as a “stop-loss” mechanism.
When an investor sets a “stop-loss” mechanism while trading within an exchange platform, it allows him/her to protect profits, limit losses and take new positions when the market finally breaks out.
Another interesting feature is the “limit sell order” mechanism. When a trader sets a limit sell order feature, his trading is allowed to close then a chosen coin hits a certain higher price.
There are plenty of other tools available today, including smart trading features, copy trading, notification bots, and automated trading.
Consequently, the strategy used by each individual will vary according to their profile. While traders prefer to not hold assets for too long, investors have a more conservative approach to the game.
Indeed, traders rely on quick short-term gains when selling their cryptocurrencies. Typically, the percentage of gains for day traders can be as low as 1% per trade. As a protective measure, seasoned traders rarely risk more than 1% of their total trading bankroll.
On the other hand, investors tend to have a more conservative approach when selling cryptocurrencies. Usually, their strategies involve hodling digital assets over a longer period.
Even though this type of approach may limit the exposure to quick victories, investors tend to have a higher probability of selling their assets at the right time in a longer time frame.