Question about the trading positions is one of the most common problems of every trader. When do I buy? When do I sell? Especially newbies are still asking these questions on Reddit or Twitter. But no one knows, when do you buy or sell your positions. It is only up to you, how you have set up your position management system. Newbies traders have no position management and therefore every change in their positions are only on the basis of emotions like fear and greed.
If you have some goal, you need strategy or system, how you can catch it. Without the exact strategy, you are just next gambler, gamer or lucky guy. These people will be probably unsuccessful in a long-term view because all their success is based on random trades without any logic. But you are the intelligent investor, which can make logical judgments. You know, when you have to buy more or sell your profits. With the right strategy, you will be always more successful than others traders.
If you create own position management system, how your trading work, you will probably reach your goal (If it is realistic). Problem is, that everyone has a different behavior than you. What does it mean? Someone likes safety and little changes in their portfolio or on the other hand someone loves adrenalin and wild trading with high risk. So, it means that for everyone is better has to create own strategy based on your personality. If you recommend your long-tested and proven strategy to your friend, It probably doesn’t work for him because he hasn’t the same personality like you.
Like every investment you should invest only money, what can you lose. For example 10-20% of overall assets. It is necessary to mention that this is only up to you and it depends on your financial situation.
I can only recommend always focus on technology and try to stick to the principles of the Value Investing. This should be your new core system, how to choose the right coins. Try to avoid systems, which promise you quick and easy money. Also, don’t forget where is your financial limit and what can you lose.
It is good to divide your investment into coins which are big (market cap.) and coins, which are at the beginning of development and it has big potential to the future. In our front of view, small coins have bigger profits but also you take bigger risk with high volatility. On the other hand, big coins usually have smaller volatility (price movements) and you take a smaller risk than in smaller coins, which are at the beginning of development. Big coins are verified by time and user, so that they can be considered as a safer.
First of all, how much do you want to make? If you know it, you know what returns you need to reach your goal due to your investment. Usually, the biggest problem is your greed. Don’t let your greed dominate in your investment judgment. If you have to change your plan, it should always be due to logical situations, not because of your greed or fear.
Again, it depends only on you. Is it your sell/buy plan according to your goal? The main thing is not to make decisions under your emotions.
People on social media like Reddit or Twitter still asking questions like do I sell? Do I buy more? Do I hold this coin? But this is no one knows. These people probably forgot to clarify their main goal and they simply act under the control of their emotions like fear and greed. If you fully understand the article, you know that all investment decisions it is only up to you. So, don’t search answer on your answer outside but search it inside your self. Don’t be next sheep and try to be the intelligent value investor.
My position management system is based on my trading experience from the stock market. My whole portfolio is divided into the projects on the same ratio. It means when I have for example 5 projects I use for each project 20% of my whole investment capital. When is a project on the beginning like ICO, I invest a whole 20% of the money at the beginning. When project running some time, I use strategy described in the following text.
Nobody knows where the price may be tomorrow or in a few hours later with 100% sure. In the following example, I use the price of Bitcoin. We know the price range of bitcoin is right now from 100 USD to 16 000 USD. In this case, we know that price is on the top – I have 1 rule, that I don’t want to buy the whole position on the top. Why? I just want the better price, which can allow me bigger gain in the long-term view. Nothing grows into heaven and when corrections arrive, I will be able to get a better price. You see how can I split this range. The rectangle shows where and how much from my position I would like to invest.
Next part of my plan describes where I sell my positions. This very depends on, how you perceived risk. In my opinion, I always try to treat the risk. In this example, we will take investment in ICO, where you want to get the best price for profit. I usually do a first sold my position on the 100% return. 100% return is the level, where I take out half of the position which I invested in. Specifically, this means, when I invested 10 ETH I withdraw 5 ETH.
Next level is 200% return, where I withdraw the second half of my invested amount. After that, I will check how project development evolves and I preparing to take smaller profits on the next profit targets. With this system my head is fine and I’m getting away from bad emotions. Next cool thing is, that I can use my invested money into other interesting projects.
I believe, that if you have a plan you are free from your emotional decisions. In most cases, emotional decisions are bad decisions in trading judgment. Nobody knows how will the future look like.
I am the person, who likes things clear and simple. So, my position system is quite a simple. When I choose my coins, I always focus on technology. If the coin has unique technology solution, strong team with the roadmap, the market sooner or later appreciate the coin.
Next thing what I do, that I divide my portfolio into big coins and small coins (market cap). What does it mean? In my opinion, Big coins are usually proved by time and they have lower volatility than small coins. So, they can be understood as the safer investment in cryptocurrency world. On the other hand, smaller coins (small market cap) have higher volatility than big coins (daily movements in the range 10-30% are normal). So, if you invest in small coins, you can make probably more money (thanks to the higher movements) but you take a bigger risk. Otherwise big coins are more stable because they smaller volatility and they are proven by time. So, big coins are better for larger investments.
I personally divided my portfolio in ration to 70% of the big coins and 30% of the small coins. For me, this is the ideal ratio of stable coins (safer but smaller % return) vs. Unstable coins (more risky but higher % return). If you can catch up small coin on the beginning and you will hold him before he is big, so this is one of the best scenarios that can happen to you.
About Position Management System, I think the best is buy now then wait for price corrections because corrections may never come and you will still wait and wait for price drop… Yes, if you buy your coin and after that, the price will drop, you probably have the loss but if the coin is really unique and have inner value, sooner or later you will have a profit. According to this analysis, data shows that better way is to buy now than regular investing. So, when I bought my first positions on cryptocurrency market, i just buy it and i don´t care if the prices is high or low.
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