Steemit's three currencies can be pretty complicated to get your head over. So, I have broken it down to 4 different strategies.
1. If you believe in the long term potential of Steemit and are looking at your earnings as a long term investment (years) - Convert SD earned to STEEM through the internal market. Then use the converted STEEM to Power Up to SP. Accumulate SP over the years. Meanwhile, you also gain influence over curation. This is going to pay massive dividends in the long run. Note that we are talking about several years here.
2. If you are looking for a quick buck (days) - Convert SD to STEEM, and cash out at the exchanges that support STEEM-BTC or STEEM-ETH. Poloniex and Bittrex are recommended.
3. If you are looking for medium term rewards (weeks/months), but not in a hurry to cash out - Hold on to SD earned. It doesn't have the potential to devalue like STEEM, fixed to the US Dollar and you earn a fixed 10% per annum interest. This is a low risk and stable strategy.
4. An alternative to number 3. STEEM may increase sharply in value on the exchange market versus the US Dollar, which can greatly outweigh the devaluation. This is of course a high risk strategy. But if you anticipate it, convert SD to STEEM and hold till you think STEEM has hit its peak. Then cash out at the exchanges.
For more details and an explanation, please check out my STEEM 101 guide.