The #altseason exit strategy (NFA)

I love sick gains. Who does not? However, you can read a lot of stories where people tell you how they lost all the fortune they have made in 2017.

So let me tell you my exit plan. This is not top-secret nor the silver bullet to sell at the top. This is just a conservative strategy to preserve as much money in this alt-season as you can.

This is not financial advice. Do your own research and do not blame others.

Why is an exit strategy important?

Wall Street cheat sheet: Market Cycles
The Market Cycle Psychology chart

You have already seen the cheat sheet chart above. It is nothing new, if you follow CT on Twitter you’ll encounter it every other day.

You look at it, you smile, read the comments where everyone thinks we’re and you go on. No thoughts, maybe you’re thinking that you will exit the market at the top.

But you won’t. If you do it is sheer luck. However, you can secure yourself from the yellow phases like Anxiety, Denial, and Panic with an existing exit strategy.

Time- or event-bound

This is the first part of my strategy. As the market moves in cycles I am thinking about a timeframe when to exit most of my trades.

I do not plan to exit all. I believe in a future uptrend for some coins, other bags are long-term hold. But many of my bags are made for profit and they won’t live longer than my timeframe.

What is my timeframe? It is Q2 of 2021. I believe we’ll have the Euphoria around May — April is usually a good month for crypto. Many coins will pump (even XRP) and you can get sick gains. Therefore I plan my exit around this time. Maybe early Q3 for some of the bags which can pump more.

The time-bound exit is all up to you. The only thing is to be prepared to execute your mass sale when you see the market crashing. Alternatively, you can wait for Complacency to arrive and sell then. You will know it is here once the prices have fallen, dips are bought back massively by latecomers, prices are rising again but not as high when it dumped. And now it is time to sell.

You have to be ready with your plan for what to sell and what to keep for the longer term.

Taking profits along the way

You hold your bag because you’ve read on Twitter it can make 100x. This is great but 100x won’t be there overnight — and there is a big possibility that the big doom arrives when your coin is made 99x and then dumps back below your investment level overnight. This would be a pity.

This is the reason why you have to take profits along the way. Greed is not the best trait you can have.

I (and many other CTs) suggest you take out your initial investment as soon as you feel comfortable. Some examples of when you can get back your initial investment:

  • taking out 50% at 2x
  • taking out 25% at 4x
  • taking out 10% at 10x

These are just examples but I hope you get the idea.

On the other hand, while you’re waiting for your 100x many more coins do small, 2–5x in a shorter time. Won’t it be nice to take your initial investment and put it into such coins while your moonbag is growing in value slowly?

The story of the 14-step million

You have definitely seen this around social media: you can turn 100$ to 1,000,000$ if you invest right in a short time by doubling your amount.

  1. 100 x2 = 200
  2. 200 x2 = 400
  3. 400 x2 = 800
  4. 800 x2 = 1,600
  5. 1600 x2 = 3,200
  6. 3200 x2 = 6,400
  7. 6400 x2 =12,800
  8. 12800 x2 =25,600
  9. 25600 x2 =51,200
  10. 51200 x2 =102,400
  11. 102400 x2 =204,800
  12. 204800 x2 =409,600
  13. 409600 x2 =819,200
  14. 819200 x2 =1,638,400

14 easy steps. 14 good investments which turn 2x in a short time. Honestly, I would be uncomfortable doing this after the 4th step. Investing all my money sounds easy but I get some goosebumps on the thought and after step 10 is will be really horrible to invest in a coin which dumps 50% soon after your investment.

This path is nice but you should take profits and add extra steps. It doesn’t matter if you reach 10,000x in 14 steps or 25 or more.

And you should not only take profits but secure them too.

Securing your profits

This is the most important to secure you from the Euphoria fallacy: you see everything pumping. You take your profits as a good boy/girl from your trades but the money is still in your portfolio. The itch is there, buying new breakouts, new retests of coins with your profits — and then we enter Complacency, and the downhill ride starts. Your secured profits are vanishing and you crawl back to your ex-boss that you meant quitting as a joke.

Well, I do not plan to act like this and I do not want my nerves to breaking at this stage. I know this is the hardest part but we have to do this: securing our profits by removing them from active trading.

This is how I do this currently: every time I make profits I take 50% of that profit off and

  • check-out some fiat
  • move the money to my margin account
  • move crypto and fiat to my Binance Card balance
  • I create a new unrealistic trade which probably never happens and this locks my money

Now to explain a bit of this list.

I do not trade futures or margin, therefore the money is safe there. On the other hand, if the market starts falling then with this money I can easily open short positions turning the profit into profit. If you do not have a margin account or you trade futures too then an option would be moving this money from your trading balance to your main balance — just as KuCoin offers.

The impossible trade is something the following: I set up a buy order for EUR for the USDT or BUSD pair with the lowest exchange rate possible. If it hits then I am happy as I got more EUR for my USD — and I do not trade EUR (maybe in extreme situations).

Implementing

Because we all like thinking about the future and sick money gains, here’s an idea of how you can set up your profit-taking game.

Get an Excel sheet ready. List all your coins (all your trade pairs), entry price, supply (amount of coins you have of that given currency), and target price. Then create a column where you multiply your target price with your supply. This will be your overall profit for this coin — and summing up this column will tell you your overall target profit for all your coins. Now you can be impressed.

If you find this amount unbelievable maybe it is time to think about taking profits along the way. It is nice to see this amount but it is not guaranteed you will obtain all this.

Add another column where you write down how much profit you made with this trading pair. Fill this column when you close your deal. Even if it is a loss. In the end, you will see how you performed along with your imagination.

Now let me tell you this: if all my targets from my Excel sheet hit then I will be extremely happy. Not a wealthy man because I do not trade that much that I could make millions. But that money will be impressive. And I want to keep it in the long run.

Summary

I will follow my plan. I won’t have regrets.

For example, I closed my AUDIO bag at 3.2$, but it went to 4.95$ in the end. I do not feel pain nor loss. My target was 3.2$ and I closed my position. If you cannot handle such events do not look at the prices in the future.

I know you know all this. But do you implement them? What is your exit strategy?

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Gabor Laszlo Hajba

Gabor Laszlo Hajba

Well grounded developer, mentor. I wear glasses. No financial advice.