Unrealised Profit/Loss Percentages
Key Takeaways
- Simplicity in Execution: Percentage-based sell strategies involve identifying specific price targets for a cryptocurrency and selling predetermined percentages of the position at each target. This straightforward approach aids in executing selling decisions systematically.
- Principal Recovery Approach: For investors prioritising the recovery of their principal investment, implementing a percentage-based sell strategy helps in securing profits at predetermined price levels while retaining a portion of the asset for long-term holding.
- Profit-Based Sell Strategy Adaptation: Some investors use profit or loss percentages as triggers for selling their cryptocurrency. For instance, they might decide to sell a portion of their holdings when their investment reaches certain profit percentages (e.g., 50%, 100%, etc.) to secure profits or limit losses. This strategy offers flexibility to take action based on how much profit or loss they’ve gained on their investment.
Case Study – Alex’s Percentage-Based Sell Strategy:
Alex, a 32-year-old software engineer, entered the world of cryptocurrency with a passion for technology and investment growth. He began investing in Bitcoin (BTC) and Ethereum (ETH) three years ago, aiming to diversify his portfolio beyond traditional stocks.
He initially invested $10,000 in BTC and $5,000 in ETH, aiming for both short-term gains and long-term investments. Over time, Alex observed the market trends, aiming to implement a strategy that would secure profits while allowing potential gains to grow.
| Cryptocurrency | Selling Point | % of Holdings Sold |
|---|---|---|
| Bitcoin (BTC) | $45,000 | 15% |
| Bitcoin (BTC) | $60,000 | 25% |
| Ethereum (ETH) | $3,500 | 10% |
| Ethereum (ETH) | $5,000 | 20% |
| Unrealised Profit (%) | Action | Notes |
|---|---|---|
| 50% (BTC) | Sell 20% of holdings | Securing profits and reducing exposure |
| 80% (ETH) | Sell 15% of remaining holdings | Realising gains while holding a portion |
| 100% (BTC) | Sell 25% of remaining holdings | Profit-taking while maintaining exposure |
| 120% (ETH) | Sell 30% of remaining holdings | Securing more profits based on growth |
In these tables, Alex’s tailored percentage-based sell strategy for Bitcoin and Ethereum reflects his personalised approach to selling his holdings. Additionally, the profit-based sell strategy exemplifies how he chooses to react to specific profit percentages in each cryptocurrency to manage gains and exposure effectively.