/ptg/ - Profit Taking General

Taking profits is good. In this thread I'll show you how to do it and why.

WHY?

Profit taking lets you remove the emotions from trading. Anyone who was around for 2017 knows this. It's easy to look at the BTC chart and think "if only I'd bought the bottom and sold the top." In reality, very few did. The vast majority of traders bought and sold sporadically. They didn't set any concrete goals (other than "make it" or "pay off that mortgage”) and reacted emotionally when their portfolio went up and down. This is why you hear so many stories of anons losing everything or breaking even and so few stories of people becoming crypto millionaires.

Profit taking acts as a hedge against this. This happens for two reasons:
1) Rewards for personal milestones. If you just sit there watching your portfolio blow up, you're going to get greedy or fearful based on how the market's doing each day. If you take profits at pre-decided intervals, you'll have smaller cash out events to look forward to and tide you over before the big one.
2) Risk management. With a good profit taking plan, you'll minimize or eliminate losses by retracting your initial investment before your first 10x, and make sure you have at least doubled or quadrupled your liquid gains in the event that you completely fuck up timing a market peak.

In the next post, I’ll explain how to take profits the right way.

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Why isn't anyone in here? where are my CLIS frens?

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In Jan 2018 I had over 80k in crypto all from a starting investment of 1000. I was just going to keep holding until I had a conversation with a coworker and decided to take out half. This was right at the peak. I got a huge chunk of cash for savings and held the rest in crypto. Watched it bleed to 7k and now it has recovered to over half of what it was. You should take profits at some point.

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Buy TBLT

HOW?

People have varying philosophies on this, but I think there really is one best way.

It's called the Zig Forums Success Algorithm:
** Take out 8% of your entire portfolio each time it doubles. **

To illustrate how this works, let's say you put in an initial deposit of $10,000.

After your first 2x ($20,000) you'd take out $2,000.
After your second 2x ($36,000) you'd take out $3,000.
After your third 2x ($66,000) you'd take out $5,000.
After your fourth 2x ($122,000) you'd take out $10,000.
After your fifth 2x ($224,000), you'd take out $18,000.

(Note that I'm rounding all numbers above to the nearest thousand - you should be doing this too, psychological numbers makes rewards feel more tangible and you'll never be timing the market at 100% exact intervals anyway.)

So now, assuming you're lucky enough to have made five 2xes in a row (which is not unimaginable in a GBR), you've got $38,000 in the bank and $206,000 in crypto.
That means in the absolute worst case scenario (LINK goes to zero), you've tripled your money.
In the "best" case scenario, assuming you decide you want to pull out now, you've made just ~25% less after tax than you would have if you didn't take profits.

Along the way, you’ll have made sensible liquidations at each 2x event:

- one fifth of your initial deposit
- half of your initial deposit
- 100% of your initial deposit
- 2x profit
- ~3x profit

Another nice thing about this method is that it scales. It works equally well if you’re investing $100 or $100,000.
Plus the post-tax loss (vs. if you had never taken profits) scales up reasonably with 2x events: if you chicken out and withdrawal everything after a 10x, you'll have only made ~10% less than if you hadn’t taken profits. Whereas if you’re lucky enough to experience seven 2xes, you’ll have made ~35% less - but you will have more than 50xed your post-tax earnings, so who cares?

I'll be sticking around for a bit to take questions and give advice. Good luck anons

Recently took my ICO which took a dive and went into a token on leverage, came out yesterday to take profits and put into another potentially risky venture that if works out could be very good long term. Will jump back into the other token with the remainder when it goes down, which if I play my cards right with the leverage should be the same amount I had before. It's all risk but if I have another project to diversify into and set targets, I find myself forced to take profits and can feel good about reaching a goal instead of watching it rise with no clear idea of when I am meant to get out. I think playing assets off each other like this is the way to go.

Good advice. However what do you do after taking profits? You will probably want to reinvest them, bringing you back into the cycle.

What about
>never selling
do you fail to understand user?

How do I avoid paying taxes on my stock market gains? Reinvest back into a stock to hold?

Still holding CLIS. Won't sell until September when the app launches

this is actually pretty fucking sensible and I like the idea of a hedge against catastrophic events. 8% every 2x seems like a reasonable enough amount that even someone extremely bullish like myself can live with

thanks user! I gift you one big sipp

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The thing is that reinvesting profits isn't really taking profit. It's just moving money around.
This method assumes you commit to a fixed initial investment you can afford to lose. You can still move tokens around to try and make profit more quickly.

This question comes up all the time on here... technically you could localbitcoins or something like that but the reality is if you wanna cash out a life-changing amount of money there's no practical way to avoid paying taxes.

Yep, I like 8% because it's just enough to feel like you're getting some decent cash rewards when your portfolio's up but not like you're missing out too much on future opportunity.
Really anything between 5% and 10% is okay depending on your risk tolerance, but imo 8% has the best overall liquidation ratios. (the ones I described in are more or less true regardless of initial investment)

>MYT
I think I hate myself, but I'm still holding

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Well yes of course. Even though I was doing well yesterday and knew my stock could have gone higher (which it did) not having the worry of it going back down and me losing my target price was good. Having everything on Tether after making good profits felt pretty comfy and when the next crash comes Ill buy back in again. Statistically working like this, you are less likely to fail.

Assume I just reinvest it and hold it over the tax season.

Based t4rd id
I have a question: What is the best ratio of diversification of tokens to the ammount of cash invested?

when is the moon mission fren :/

Why the fuck would you use the same acronym as another general you fucking loser? This is now Penny sTock General.

I have 2.5 btc

my plan is to sell 0.5 btc at 30k, 50k, 100k, 150k and 200k

Yes, exactly this. By creating a plan you never have to worry about whether you made the "right" decision. You know exactly how much you stand to gain or lose and aren't stabbing in the dark trying to time a market peak or local top.

Sounds like a nice way to suffer never ending anal torture by the IRS. Great advice!

September at or before launch

Stocking up on more until the DO

tfw .11 average. Didn't know they were going to be dumping shares to drop the price

IKTF :(

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Who's buying UBX today?

where my rbc leafs at

How would this compare to taking out 20% at every 10x? Too busy to do the math right now.

Here, waiting for a good moment to buy UBX.
All my other bags are down.