Of Vital Importance
How and when you choose to take profits is an important aspect of investing and trading. However, regarding larger returns, it becomes even more important. When I speak of larger returns, I also refer to percentage moves and not necessarily dollar valuations. In other words, securing profits from trades that played out well, regardless of capital allocation. These are your 10X to 50X returns and are usually realized in the memecoin and micro-cap arena.
Being risky sectors, it’s important to lock in gains when they appear, especially if they are in the vicinity of 10X and higher. However, it’s important to do so in such a way that you not only preserve and protect gains but also gain additional exposure to the market. In other words, securing profits by seeking out future profits. An asset that has soared in value is likely to correct. The key is to lock in those gains and allocate a portion to new trading ideas.
How one chooses to go about this idea is of vital importance. Securing one’s initial investment is imperative and as a result, eradicates the chances of potential loss. Once you have regained your initial investment, you cannot lose… the risk of loss is no longer a threat. This is the first step. The remaining capital should then be deployed in a very strategic manner. The strategy I am about to expound upon is my own approach and one can choose to modify these allocations.
Secure A Stablecoin Allocation
Inflation is inevitable and stablecoins might not appear attractive to the average Crypto investor. However, with DeDFi and stablecoins such as HBD, investors can earn a yield on their holdings. I advocate allocating approximately 40% of the remaining capital to stablecoins. My stablecoin of choice would be HBD which offers a return of 20% per year. Compounded earnings will increase the efficiency of this idea.
Heavy Hitters
The “Heavy Hitters” allocation should be blue chips or Proof-of-Stake projects. Certain coins can tick both of these boxes. The idea is to secure a relative amount of strength through a more stable Crypto investment, and if possible, additional strength in the form of staking rewards. This allocation should also be approximately 30% and can be fractionalized if necessary.
Ongoing Speculation
The final allocation is primarily for the continuation of speculative investing and trading. This can include various risk profiles, ranging from altcoins to even memecoins. Micro-caps will also fit nicely into this allocation. This is also a 30% allocation along with the “Heavy Hitters”. Essentially, much of the remaining capital returns to the market in some way shape, or form. Any future investments that realize significant gains are then reapplied to this process of profit-taking.
Final Thoughts
In summary, the initial investment capital is recouped. The remaining capital is split between stablecoins, blue chips, and other speculative altcoins. By following this approach, the chances of loss are removed, additional capital is preserved, and ongoing speculation is achieved. All the best! See you next time!
Sapphire Crypto 