One of the key skills in crypto trading or investing is knowing when to sell. Picking the right moment to ditch the asset determines if you are going to make a profit or a loss. But just how do you recognize that perfect moment?
We’re glad you asked. Here our our top 8 indicators that may give you a hint that it’s time to sell your crypto:
TABLE OF CONTENTS
1. You’ve Reached Your Goal
Seems like basic advice, yet, you’d be surprised how many people ignore it.
When you invest in an asset it’s paramount to set a profit goal. For example, you may wish to multiply your investment by 2x. If you buy an asset when it’s priced at $10 per coin, it would mean your moment to sell is when the price climbs to $20.
During a price surge, you’ll feel tempted to wait and see just how high the value can climb. But we advise not to. Ideally, your profit goal should be based on market research and analysis. Thus, anything above the target price is high-risk territory.
It’s important to exit when you are happy with the profits and not to look back. That’s why an investor should start with making their financial goals clear.
2. You’ve Hit Your Loss Limit
Every trader or investor has their own level of risk tolerance. For example, you’ve invested $10,000 to buy 10,000 coins and don’t want to loose more than 20% of your initial investment. So, you need to sell if the price of one token goes down to $0.80.
The problem is, it would be difficult to seize the right moment ‘manually’ because cryptocurrency prices are bouncy. We recommend using stop-loss orders — a useful trading tool your exchange provides. When the price of your tokens drops to $0.80, the platform will sell them automatically.
3. The Price Has Been Going Down Steadily
The value of your investment has been fading over the last few months? Unfortunately, you might be holding onto a dead coin.
Don’t beat yourself down, you’re not alone. At the moment of writing, over 1,000 cryptos have failed for one reason or another. The best option could be to sell your crypto without delay to avoid further losses.
4. The Price Has Skyrocketed
The opposite scenario: your coin shows a sudden upsurge. You look at a trading chart and see the price making new highs.
Maybe the price will grow even higher, so would it be better to wait? Theoretically, everything is possible, but the cryptocurrency market is highly sensitive. A sudden price rise can be due to something a famous expert said recently. Or an anticipated event like halving. Or it may be just a splash one of the crypto whales caused.
Whatever the reason, the price swings are likely to go down, and soon. Don’t miss the moment to sell your crypto (or a part of it) and make good profits.
5. Your Trading Strategy Dictates to Sell
Trading strategy is a pre-made framework that guides your trades. Among other things, your strategy will tell you when to sell your asset.
For instance, if you are position trading, you may hold onto your crypto for several months. If you’re a swing trader, you buy and sell more often, making a profit on smaller ups and downs.
We suggest to develop a strategy before-hand and stick to it. It will guide you through small losses and stop from panic selling as long as your strategy is solid
Want to know more about trading strategies? This article will be helpful.
6. There Are Negative Rumors Around the Project
Crypto is extremely susceptible to what people say: on this market, you often “buy the rumor and sell the news”. It applies even to the best-performing assets like BTC, let alone young coins.
Consider ditching the asset if you see one of the following rumors circulating on the net:
- Technology issues;
- Major investors going back on the deal;
- Internal conflicts within the team;
- Legal battles;
- Major security breaches and hacks.
All these things can trigger a price drop. When many investors lose faith in the project, they will start selling their tokens massively.
7. You Expect Legal Complications
Currently, many government don’t know what to do with crypto. Some tend to be friendly or permissive (Germany, UK, Estonia, Malta, Japan), others are cautious or utterly hostile (China, Vietnam, India, Russia).
Have heard about an upcoming ban or massive screw-tightening? Remember that most mainstream investors don’t want to mess with something illegal or semi-legal. Consider selling early before the news hits all the media and drives the price downwards.
8. A Better Project Has Entered the Market
New crypto projects appear regularly, and many of them are labeled as revolutionary. For instance, Ethereum was challenging Bitcoin when it emerged in 2015. Now, NEO and Cardano promise to kill Ethereum.
Some of these threats are marketing tricks or wishful thinking, but others may be real. There’s always a chance that a new project will outshine the one you have invested in. The golden rule would be to make research and assess all the risks.
If the industry experts agree that this new project is far better than the one you’ve invested in, consider selling and reinvesting your funds. Again, when it becomes common knowledge, the price will nosedive.
Take Everything with a Gram of Salt
Note that these are general recommendations, not investment advice. It’s up to you to hold onto your coin if you believe it will recover and grow but you should be aware of all the risks.