Or at least that's what people will think about you after this bull market.
I mean, the goal is to get rich, right? I highly doubt you are in Crypto only because of the Tech, right?
They will be wrong, it won't be because of luck. 99% of people do not see how much pain we endured during this (maybe more?) cycle and how much willpower and discipline it took to be where we are right now.
We are on the verge of something huge, and I hope you have been stacking and preparing for the bull market to make the most out of the run, but that's a topic for another post that I actually already wrote and you can read here.
It's funny that I picked a very similar title for this post though, I guess my mind is on the same place, I just hope I'm onto something and following the right path, otherwise I think I'm screwed.
But anyway, it's not luck, if you read the post above you will be more convinced that you deserve a fuckton of respect if you do end up winning this bull market.
The important part is...
How can you actually win on this bull market?
I'm gonna be crude and real, this is a post about taking profits, it's not written based on any particular scenario or person, but you might resonate with a lot of what I'm going to say.
The majority of people in crypto fail to make it out of the rat race because they have a wrong approach to crypto, in fact I used to follow the same path over and over without realizing that I was simply just wrong, and that my approach would always, undoubtedly, fail in the end.
1- You have a portfolio from coins you picked carefully and did your research about.
2- You pick an arbitrary amount of money you want to make out of your portfolio.
3- Then you run the simple math of "I have 1,000 and I want to leave this bull market with 10,000, so I need my portfolio to do a 10x.
4- You set your "sell alarms" around that amount.
The problem is you will not sell at that point. You will make a lot of money.. take some profit, and then lose most of it.
Why?
Because you are human, and we are full of greed and allow ourselves to think bigger and envision we cannot fail after making so much money, we want to sell the top.
Selling the top is never an option and 99% of people fail at this. Nobody knows where the top is, whoever tells you that is either a bozo or is lying.
The Crypto - and every market for that matter - is based on cycles, where the end of the cycle is marked by the top. The thing is, nobody knows how long there is left on any given cycle and nobody can predict the top. The market may look to be crashing, then recover days later, and make a new all time high, or it may not.
Take the last cycle's top in 2021: The market crashed for a few months, and then it recovered a few months later and did a parabolic climb, setting new all time highs everywhere.
No one knows where the top is, and if you try to time it, you will get turbo rekt.
But most people are greedy, and they will try to buy more after taking profits, and then ride the wave down to lower levels than where they took profits, possibly even losing 95% of those gains.
The game theory and psychology behind this mistake is simple: At -20% you didn't want to sell what might have been the bottom of a 'dip', so you hodl'ed and rode the wave down to 40%, then to 60%, then maybe to balance, and maybe even to lower lows than your 2nd entry points, wiping any gains you made before.
I am speaking with outcome bias here, because at the time it just looks like a dip or a short term dump, it is only many months later when you can look back and know where the top was and where the crash began, and where exactly you made your worst mistake in the cycle.
Do some research, the players who made fortunes in the last couple of cycles are vocal about it - we love clout, we are humans, flexing is in out nature. The common denominator is that they didn't become millionaires from cashing out of the game at X target, but from the profits they took by dollar cost averaging out of their positions on every leg up.
You can make a lot of money from coins going parabolic, all you need to do is take profits from it on every leg up, and then invest that on other coins that you are convinced - and have done your research - that will also grow but haven't done so much. Then sell every leg up on that 2nd coin, and you can maybe emulate that waterfall concept several times and add risk to the equation, but as long as you take profits on the way up, the multiplying effect will be huge.
That way, even if you don't sell the top on the first coin in the equation, and that you actually end up being at a loss in the end, you won't even care, because the multiplying effect from the waterfall moves you made dwarfs the losses.
This is easier said than done though, to actually pull this off you have to identify where trends are going and where will money flow in the future during the bulls. This is impossible to predict, but there are many good practices that will help you decide correctly in most of the times - but that's a topic for another post.
The multiplying waterfall concept is the strategy you need to understand.
Think of your portfolio as a business on the top of a volcano that will soon explode.
The objective of that business is to cash funds out to stables, or if you want to be ultra safe, to stables, in the end nobody knows if the next crash will be so hard that it will obliterate some stablecoins as well.
Keep in mind that you don't want to take out too much money from the business to a point where it's not maximizing its potential to use that capital to make profits, but on the other extreme you don't want to take out so little that when the volcano finally explodes you come away with nothing.
1- Taking profits means taking money out PERMANENTLY to Stables or Fiat.
2- Assume that your portfolio will be lost in the market
3- Assume that what you make in crypto will only be the profits you took to FIAT along the way up until that crash in which your portfolio 'died'
But how the hell do you do take profits succesfully?
Create a profit taking spreadsheet and write down your targets in terms of profits, not money making goals.
Work out how much money you want to make in crypto and then take profits along the way in a way which gets you that target while still being 'in the game'
For most of you starting with very little money, that means taking huge risks, but that's the only way you are going to make it with smol money. You need as much money as possible in the game in order to generate gains.
If you have less than 6 figs in the game and want mid 7 figs, you shouldn't be taking any profits until you are over 7 figs. Do not be an idiot who takes profits in such a way that they will never hit the life changing money.
This is why I say to not take your initial - this is where you invest ten dollars, and once that bag becomes twenty, you take out ten, this is a stupid strategy and will never generate real wealth.
You gotta be aggressive and take risks.