In times of markets going into the good direction, there comes always a time when we ask ourselves when we should cash out our profits.
On this subject I read once a book by Curtis M. Faith called „The Strategies of the Turtle Traders“. I read the book in German and I'm not sure whether this is the correct title in English. The strategy in this book is to research the markets to find friendly trends. Once a trend discovered, they enter into this market with a small amount. If the trend is confirmed, they increase the position and at the same time they put stop losses every day at a higher level. Following the trend will basically make them earn money.
Trading is not in human nature
The Turtle Trader have realized that trading is not in human nature. It goes against our instincts. Instinctively we sell when we have a profit and we hold when we are losing because we don't want to realize the loss. Their strategy was built to keep our instincts under control with very rigid rules.
When the trend is confirmed, increase the position
When the trend is broken, sell
It's actually a great strategy and I tried to apply it but I had constantly to fight against my instincts.
Cashing out in what?
When it comes to crypto, often our tokens are not what I would call neutral. Let's take hive. Hive has an organic return from staking of about 3.2%. In addition to that with curation you can have a return of 10.6% per year. So when you cash out, you should keep this in mind. If we sell hive to buy USD or another fiat currency, we will have almost no return on our money but we will have a kind of price stability.
What we have to ask ourselves is, do we want to jump out of a positive trend and give up on about 13% APR just for more stability? In my opinion it's better to buy HBD and to have at least 10% interests on the saving account.
Find a way to beat our instincts
I've tried a lot of things and my human instincts were always strong and made me do the wrong things in trading. So I had to find a way to contain my instincts. I found a very good way that works for me and it's not to care at all. I don't care whether prices go up or down. I just keep what brings me a return and this works perfectly well for me :-)
What about you? When do you cash out?
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