Imagup General Magazine 2024
Traders and investors usually spend hours and days before entering the crypto market. They lay down perfect strategies so that they don’t go bankrupt. But what if something actually goes wrong? Or even hints about going wrong? Entering the crypto market with a clever strategy is wise, but an exit strategy is even more important to ensure that you don’t lose all that you have earned.
However, most of the traders and investors lack this insight and go without any exit strategy. Does it hurt their profits? Of course, it will if one doesn’t know when to stop and how to stop. This article discusses in depth the crypto exit strategy.
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Greed vs Instincts:
It is quite natural to stay on the ground when profits are flowing in. But, it is essential to differentiate between instincts and greed. Instincts usually are hard beliefs that some things work in favor, but Greed is a hard desire that something must work in favor. There is a fair share of chances for the instinct to play out, but greed is bound to push you into losses.
The Crypto market is a scary market. If it rises one day, it may fall the second day, and there is no guarantee about it. Don’t be greedy. Good if it improves. But, the losses may be heavy and burdensome if something unfortunate happens. So, don’t give in to greediness. Let the crypto flow but pull them out at the right time.
Investment brokers may help in taking the right decisions in this case. Security issues should also be considered. Crypto markets and wallets are most volatile to hacking. Even a minor doubt shouldn’t be ignored.
Exit point:
Exit point doesn’t necessarily have to be a profit point. Different financial situations in the crypto market have different things to teach to the investors and traders. While some may exit at a profit point content with what they have made, some others may exit with limited masses. It is sheer luck and fortunate to have earned or amassed a large wealth. But, not everyone’s Elon Musk, and it is almost impossible to predict crypto markets. Hence, exiting at the right point of time is essential to avoid landing in a financial abyss.
Discipline, rational thinking, and wisdom are extremely important in crypto trading. It is important to understand the bulls and bears also. It is significant to design an exit strategy as well right before you enter. Of course, circumstances change, and they are bound to change. But, that shouldn’t influence one’s trading objectives. At the end of the day coming out with wealth in hand is the real success in crypto markets.
Timeframe:
Similar to an exit strategy, a timeframe should also be set prior to entering the crypto market. Had it been a little late, one would go bankrupt. The thought is really scary. Then, why risk all the amassed wealth. For day traders, deciding on a timeframe is easy. They exit and enter whenever they want. However, it is difficult for long-term traders and investors, and deciding on a time frame is a tricky part. But, choosing a trading style that best fits one’s strategy is a comfort to go with.
Profit stops:
Take large or habitual investors, for example, it goes nice. But, once profit stops and losses are incurred, even the most experienced investors tend to continue the crypto game expecting to see a peak next. What if the peak never comes? What if the cash crunch continues? Does that not send one into an unrecoverable position? That’s why, always have a threshold in place. At that particular threshold leave the game. For example, if the profit reaches zero, it is time to exit. The profit may shoot up from zero or go into losses right away. But, it is clever to pull back once the profits hit zero and reanalyze the strategy to start the crypto flowing into your wallet again.
Unprecedented situations:
The Crypto market is a parallel financial market. The impact of real-world happenings is reflected in the crypto market too. Hence, it is essential to consider the real-world happenings and connect the dots to predict the trends in crypto markets. Investors and traders are usually knowledgeable and people of wisdom who can make their own decisions, manage their own assets, analyze their own strategies, and evaluate their progress. The same need not be the case for everyone else. While some people take the help of their brokers or experts, some are just testing the waters. The risk is more in these kinds of cases. How to escape these risks then?
It is better to not trust anyone and take strong decisions on one’s own instincts. It is even better to eventually gain your own knowledge to avoid depending on others. Independence comes with the freedom of taking your own decisions and entering or exit whenever necessary, not when someone else suggests.
Conclusion:
These are just a few suggestions. An investor broker or trader usually helps more in this kind of situation. It is trickier for long-term investors and for someone with no proper exit strategy. If one is driven away by greed, there is no scope for even future investments. As mentioned above, crypto markets are extremely volatile in nature. The volatility may call for fast decision-making capability and moving the assets around. It is essential to adapt to this culture to avoid losses, besides preparing an exit strategy.
