A few weeks ago, I talked about the dream of achieving financial freedom that everyone wants to reach when entering the crypto space. One of the keys to achieving it is taking profits. It might seem very easy and logical, but in reality, it’s much tougher to do. In this article, we will explore the reasons behind the importance of an exit plan and a few tips for you to apply.
An Exit Plan Is A Must
Many people believe that the bull run is coming and that they just have to cash out at the top, buy a mansion with that money, and it’s as simple as that. But the reality is that the vast majority will fumble their bags and sell too late or even too early because of FOMO.
Especially for those who have not experienced a prior bull run, the euphoria, especially at the end of the bull run, is overwhelming. People around you will be talking about it, social media will be full of people saying it’s all going to go up for whatever reason, and even mainstream media will be discussing it.
To avoid falling into this trap, you need to make a crypto selling plan in advance, during times when the euphoria is gone, to avoid any bias and to have a clear mind. This will help you create a realistic plan based on factual information.
Tips To Make a Good Exit Plan
First of all, it’s important to decide which format you want to use for your exit plan, whether on paper or digitally. It’s also crucial to track your investments to know how much capital you put into the market and the average buying price (I use an application called Delta).
You can choose to sell when your investment reaches a certain value, but I prefer selling a portion of the crypto holdings I have (for example : if I have 10 AVAX, I sell 20% of my position at $100 per AVAX). This method is easy to follow and makes your plan clear. You can also calculate your potential gains to ensure you aren’t surprised and overwhelmed with emotion during the bull run.
Another tip for finding appropriate price targets is to use sites like TokenUnlocks to help you determine if there are massive unlocks that might put strong selling pressure on a token. This works for most well-known tokens, but for lesser-known projects, you might need to check the whitepaper or the project’s website.
Overall, to make price predictions, you will need to look at the Fully Diluted Valuation (FDV) and compare it to other existing projects in the same narrative. You can also use resistance levels for tokens that had a higher price before or psychological selling zones such as $1 or $100.
And you, what are your plans for this bull run ?
As always thank you for reading !
My favorite Crypto Faucet : Cointiply (referral)
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Disclaimer : This is not a financial advice, you need to do your own research !
