Over the past few days I have been asked multiple times, when is it best to sell your coins and move on. I answered it on my Crypto Twitter but thought I would answer it here so it doesn't get lost in my feed.
What Does Scaling Out Of A Trade Mean?
Well, it means that you set your sell orders staggered so that you start to take a little profit as the price rises. This way you free up funds faster to invest into other opportunities and at the same time reduce your risk on any one investment. Let me show you an example.
Everyone meet Mali! Mali is a savvy Cryptocurrency trader who employs the power of scaling out of his trades.
How To Scale Out Of A Trade?
So let's use a simple example.
Mali has decided to buy into a new and upcoming coin that costs 0.00000001BTC per coin. Cheap I know! Mali spends 0.01BTC on his purchase which gives him 1,000,000 coins.
Now Mali is going to set his sell orders in a way that allows him to regain access to his funds to move on to the next opportunity while still keeping a nice size bag for any future price increase and profits.
Mali does the following:
Sets a Sell Order of 500,000 at 0.00000002BTC (0.01BTC)
Once this order is filled Mali has made his initial investment of 0.01BTC back and can move those funds into other investments to repeat the process. Mali also has 500,000 coins left to make some profit.
Sets a Sell Order of 100,000 at 0.00000005BTC (0.005BTC)
Sets a Sell Order of 100,000 at 0.0000001BTC (0.01BTC)
Sets a Sell Order of 100,000 at 0.00000025BTC (0.025BTC)
Sets a Sell Order of 100,000 at 0.0000005BTC (0.05BTC)
Sets a Sell Order of 100,000 at 0.000001BTC (0.1BTC)
Now let's say Mali has done his research and his investment reaches 100 sats (0.000001BTC) he would have made 0.2BTC from his initial investment of 0.01BTC. That is a cool 1900%+ ROI if my math is correct.
A pretty simple technique that allows you to take funds off the table quickly and at the same time reduce your risk exposure on any given trade. Keep in mind also that on the journey to 100 sats you should be looking to rebuy the dips if you still feel the coin has the potential to increase in price.
I hope that has helped you to understand how I scale out of trades. If you do have any further questions feel free to ask in the comments below or get me on Twitter @SentineliAU!
Final Note
Always do your own research when investing in Cryptocurrency. Remember that by the time you hear about a coin from your favorite Twitter personalities they have already accumulated. Yes there is still some great profits to be made but the real winners are coins you find on your own that nobody is looking at yet.
Happy trading!
SentineliAU & Mali