About the strategy of taking profit in the bull market

Yesterday, a friend asked what price UNI should start to take profit in this round of bull market.

Regarding the take-profit, I will first classify and judge according to different varieties, and divide my own positions into large-cap currencies and small- and medium-cap currencies. According to past experience and general laws of the general investment market, in a bull market, large-cap varieties (large-cap blue chips in the stock market) tend to reach the peak first, and small- and medium-cap varieties (in the stock market, small- and medium-caps) tend to reach the peak later .

Therefore, if you take profits in batches, I will first focus on the large-cap currencies to judge whether the large-cap currencies are approaching the peak or have reached the point where the batch-to-take profits are reached. If the time for the large-cap coins to take profit is not reached, all my coins will not take-profit; if the time for the large-cap coins to take-profit is reached, I will first start to stop the profit of the large-cap coins, and then consider whether to start taking profits for small and medium-cap coins .

Among the existing digital currencies, I think there are only two large-cap currencies: Bitcoin and Ethereum.The combined market value of these two accounts for 62% of the entire digital currency market value, and they are also the leaders of the entire digital currency market.

Judging from the current situation, I think these two coins still have a good trend, and there is still a long way to go before they are close to their peaks.I still maintain an observation attitude, at least until June. When I judge that these two coins are approaching their peaks, I will start to take profit of these two coins first. Before that, all my coins will not take profit (unless the fundamentals of that coin have changed drastically and deteriorated sharply).

After I start to take profit of Bitcoin and Ethereum, I will first look at their fundamentals for the take profit of small and medium-cap currencies. If their fundamentals are still good and there is no particularly large negative information, I will next see how many times they have risen from the bottom.

If the multiple of the increase is not as good as Bitcoin and Ethereum, I will continue to keep it for a while before observing to see if there is any potential for subsequent increases. But this does not mean that the rise of all coins can reach the rise of Bitcoin and Ethereum; nor does it mean that they have to wait for them to rise to the level of Bitcoin and Ethereum before starting to stop profit. So there is a degree of assurance here. I will look at their fundamentals at this time. If the fundamentals are good, I will stay for a longer period of time;

If the rising multiple of small and medium-cap coins has reached or exceeded that of Bitcoin and Ethereum, I will most likely start taking profits.

So in general, my strategy is not to set a specific price first, and then decide whether to take profit based on this price, but to judge whether the overall market has reached or is close to the peak based on my own understanding, and then judge whether it is based on the market. Take profit.

Going back to the specific example about UNI above, I didn't set a target price for take-profit, but will continue to watch the market trend. As long as its fundamentals remain good, I will wait for Bitcoin and Ethereum to take profit before considering taking profit UNI.

Why do I use market trends instead of prices to set the take-profit method?Because I think the market is the basis for judging all strategies, and market conditions change very quickly, and people's cognition often lags behind market changes. So I tend to use market conditions to guide my actions.

For example: In many articles last year and before, I once thought that the peak value of Bitcoin in this round of bull market is about 20,000-50,000 US dollars, and Ethereum is about 1,500-2,000 US dollars. However, after the outbreak of DeFi, the trend of the entire market completely overturned my imagination. Coupled with the large sums of institutional investors entering the market, this round of bull market has obviously found a strong driving force.

Under such circumstances, if I still stick to my cognition at the time and start to stop profit at $20,000-50,000 in Bitcoin and $2,000 in Ethereum, the profit margin will obviously not be enough, so I am willing to take some risks and follow the market. Walk. But at the same time, I am also prepared to bear the risk that the market will suddenly plummet, and the bulls will turn into bears, which will cause me to not realize the risk in time.

My approach is just for your reference.

In the comments of my previous articles, some readers also said that he has started to take profits, and he is going to take the realized funds to the bear market before starting regular investment. I think this is also very good.

Everyone has different judgments on market trends, risk tolerance, and profit target setting, and it is impossible to have a set of standard practices. Each approach has its own advantages and certain risks. Every investor has to find his own way.

Whatever approach we take, one thing to keep in mind is: Am I able to take the biggest risks in my strategy? Is it possible to accept the loss that this strategy may bring us?