Over the course of the years and countless hours of learning how to trade, one thing that has helped me become a profitable trader is to lock in profits.
Prior to locking in profits, I wasn't making as much. However after I started locking in profits, I became more profitable over time. So why do I lock profits in? For a few reasons.
The first is that you never know for sure where the market is going to go. You should definitely have targets in mind but the market doesn't always move in the direction as planned. The market is its own entity and will do whatever it wants.
The second is that, when you lock in profits you essentially lower your cost basis. For example, if I bought 1 BTC at $10,000 and sold 0.1 BTC at $11,000. This means I received $1,100 for that 0.1 BTC I sold. Now, my cost that I bought the BTC for is $9,889. I now have 0.9 BTC and I paid $8,900 ($10,000 - $1,100) for it.
The third reason is that, markets always go up and down. They don't always just go up, nor do they always just go down. This here is tough to get a grip on. We're so emotionally attached to money that we can make irrational decisions if our position sizing isn't in check.
Fear and greed can swing your emotions with great force. It can be gut wrenching to see your portfolio in the red and it's hard to control those euphoric feelings of those massive gains. I've experienced these many times but I think that by keeping your emotions in check, you'll set yourself up to be a more profitable trader.
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