Bitcoin has been doing a lot of good things to improve the lives of its HODL-ers. Many people who have faith in Satoshi Nakamoto’s vision have been able to lift themselves from the working class or even lower class statuses. Many of them have become rich after they kept hodl-ing for so many years. However, things have eventually changed. We are no longer in the year 2016 or 2017. It looks like things have become much slower for BTC rise. Is it time for BTC hodl-ers to keep hodl-ing?
Crypto Trading Is Like Every Other Market
While crypto trading might provide much more opportunity as well as flexibility as compared to the stock market or physical metal market, it still provides similar price action behavior. At the end of the day, they always have their own ups and downs movement. It was perhaps slightly different back then, but now this is where we are at.
And yes, just like the stock market, you might end up more profitable if you take profit once in a while rather than go all in and just wait until the price gets really high. Imagine if you trade BTC back in 2019 where price was so low and you dumped when it hits $12,000, you would end up in some profits. Now imagine if you kept hodl-ing it until it went back to $4,000, your profit would have vanished easily.
It’s okay to try to take profit, especially if you are already making enough profit. It’s actually encouraged to take profit as price goes up and set up fixed goals. For example, if you enter at $6,000 and you plan to take 50% profit at $12,000, that’s actually highly recommended. You can set up limit orders for the rest of the 50%.
Most smarter and disciplined traders even trade both ways, which sometimes means they even attempt to short the market in futures. While this is not encouraged in crypto where the overall trend is often one way every year but you get the point that you shouldn’t be a permabull and try to look at things more objectively.
Trading Is About Risk Management, Not Where You Think Price Will Go In X Years
Every crypto enthusiast believes that cryptocurrency will keep going up in the long term but making a bold prediction is very different from having disciplined risk management. At the end of the day, you are investing in something because you want to make money. Be it 20% or 50% or 200%, I don’t know, but you need to have exit targets, just like you need to know when to enter the market.
Even if you think Bitcoin can keep going higher to (let’s say) $50,000, it’s still very different if your entry is from today’s price (around $11,500) as compared to someone else who’s been HODL-ing from $4,000 or $5,000. Why? Because when price moves against our predictions, that someone else can just cut his profit at $9,000 and still end up being profitable. While on the other hand, if you cut loss at $9,000, you would end up losing money. And this is why your risk management is quite different from the other trader who has been hodl-ing from a much lower entry point.
At the end of the day, crypto trading must be treated as if you have tight risk management. When to enter and when to exit are the key to trading successes, not whether you believe BTC or cryptocurrencies will become mainstream or not. You can also believe Apple or Google will rule the world in 10 years but making a bad entry will make you lose money.