So, you've started to make some profit and now you're wondering "When do I take profit!?"
This is a dilemma that many investors seem to face and get caught up in. The constant thought of "I can make more" seems to come to mind but has often resulted in losing much of those gains in the first place.
The first point that needs to be made is that not all investments need to be home runs. That means, sometimes it's more important to just get on base.
It isn't an everyday event that you hit 100%, 200%, or 300% returns, or at all depending on each person. That being said, that does not mean you cannot be successful and still make money investing.
There are many different strategies that can be used for profit-taking. Some include the 20%-25% rule.
This idea is that if you want to grow your portfolio, to take profits in the 20% to 25% range. This comes from the idea of jumping from the bandwagon before the correction comes. If using something like this then there should be a specific time length in mind or plan in order to see enough movement to ride and exit from.
Another easy strategy to follow is reverse dollar-cost averaging. Much like the idea of averaging the cost in overtime we can do this in reversal. As the profit continues to increase, we take small amounts out to lock in gains well keeping portions of the investment in. Through this strategy, individuals make withdraws periodically over the course of days, weeks, or months.
An easy example of this is buying 100 coins/stocks at $1 per coin/stock = $100.
The original price increases to $1.25 resulting in our investment being $125.
At this point, we would decide to withdraw 20% which is $25. We are now left with $100 for 80 coins/stocks. Though this does not seem like a significant gain and has left us with fewer coins/stocks when done continuously and properly it results in profits not only being made but kept.
Whatever your strategy is always remember that you are in this to make money and to improve. There is zero value in watching your investments increase if all those increases are lost due to greed.
Whether you made 5% profit or 50% you are in the green, and that is more than many can ask. So be happy, and continue to get those profits.
Thanks for reading. As always stay updated, stay educated.
