Lesson learned- setting goal for profit taking
credit: coinmarketcap.com

Lesson learned- setting goal for profit taking

By Smendel | Allaboutcoins | 24 May 2021


What a bloody day yesterday! Mr. Market showed no mercy, hand crashed little hope of many minnow investors like myself.

After consecutive few days of market crash with most of the coins lost its value over 50%, not sure about you, I was panicked and couldn't hodl any longer, eventually I sold some of the coins at the bottom of the price, right before the market went back up! 

Ironically, isn't it always that way that every time you buy, the market drops, and when you sell, it goes up. Feels like there is a naughty spirit hiding behind the market playing games with you. Sometimes it allows you to win so you stay in the market, and then when its mood changes, it crashes you like an ant without mercy! 

I am an early adopter of cryptocurrency. I witnessed the whole progress of market turning from bull to bear in 2017, then 2 long bear years of 2018-2019, to now.

If I tell you that I didn't make any money out of the bull market in 2017, you may not believe in me. But it's true. I did see huge profit at one point and thought I was about to become rich soon. Unfortunately, one lesson that I learned hard way is that you got to take out at least your principle as soon as you can. The rule #1 Warrant Buffet tells us is DON'T LOSE MONEY! But I let greediness blind my mind. When the market turned, I was hoping that it will stop and go back up until it was too late... I lost over 2/3 of my principle, eventually to a point where I decided to let go and not think about it. I had thought that I lost all the investment I put in. 

This is why in this bull market, I managed to take out all the principle as soon as I can. I kept the profit in there and really enjoyed the ride until last week... After few days' struggling, I surrendered to the Mr. Market yesterday and took some profit out. Even though the value had gone down significantly, profit is still profit so it's good. I am not regretting for the decision I made yesterday. But I do regret for not thinking about taking any profit out before this market event. Once again, I let greediness blind my mind and had thought the market will continue to go higher and higher...

Compared to many people, I am fortunate since at least I am not losing my principles. From hindsight after this event, I learned that it's critical to set  goal for profit taking. You can do trench out, instead of all out. With different trenches, it can secure you better profit. It works in both directions of the market. If the price continues to go up, great, at least you still have some coins in there that you can continue to enjoy the ride. But if the market goes down, you have already had some profit in the pocket, and you may even decide to trench back in when timing is right. In this case, you gain on either way. This would work better esp. for high volatility investment like crypto. 

We live to learn. Unfortunately, sometimes, lessons are learned hard way. But as long as we can learn from each failure and be smarter, we will be able to make better call. 

 

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