How to Make Your Millions in Cryptocurrencies Faster With One Simple Step
From HODL to swing trading could be the key
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Since I started invested many decades ago, I was a long term holder. When I entered the cryptocurrency space a few years ago, I still had the same mindset except it went from holding to HODL (or hold on for dear life). This worked for me before and I thought the same applied to this new investment. I quickly realized my old rules needed a refresher to make money.
Since the last big bull run in the cryptocurrency market in late 2017, the market made a few small increases since then but nothing in comparison to Bitcoin’s rise a few years ago.
A few months ago, I thought about selling Bitcoin and then buying back after a $1000 drop. After watching the market almost every day, sometimes multiple times a day, I didn’t think I had much to lose. I would have sold and still would have made money.
I did not sell and saw the price of Bitcoin go from $8000 to $7000 before the price went back up again. So I started thinking, I could have sold and bought back in again but didn’t. Sometimes you have to do some paper trading or mentally watch the movement of the market before trying out a new idea.
Then a few months ago, I heard BitBoy Crypto mention the same thing. He said take your wins whenever you can. In this market you have to, you never know what direction Bitcoin and the cryptocurrency market can go.
These are seven reasons you should consider swing trading your cryptocurrency.
- You never know when Bitcoin Whales decide to sell their cryptocurrencies
- Your cryptocurrencies could be worthless
- Swing trading enters the picture
- Can you still make your millions through HODL?
- What is your cryptocurrency exit strategy?
- Keep a good record of your trades
- Show me the money
You never know when Bitcoin Whales decide to sell their cryptocurrencies
Whale alert! Someone moved 101,857 BTC ($933M) in block 636,503.
Bitcoin Block Bot - June 22, 2020
Unless you follow the cryptocurrency market religiously, sometimes you don’t have the time to analyze the market very closely. You may be able to spot when a Bitcoin Whale may make their next month and sell. They have done this many times before, they sell their winners to buy back in the market at a lower price.
To be honest with you, I follow the market, read a couple of articles and listen to a few crypto YouTubers every day. I really don’t sit back and do the next step. I don’t follow charts to analyze when a Bitcoin Whale may make their next move. So I do the next best and easiest thing.
I look at my own cryptocurrencies and sell when they meet my criteria.
You need to set up what works best for you. You may be happy selling for a $20 gain, a $50 gain, or a $100 gain. There is no right or wrong answer.
You just have to make sure the numbers work for you since the taxman is waiting to collect his money. What you make needs to be a good amount so you won’t end up paying everything you made back in taxes. You need a little bit of leeway so when you sell, the numbers really are worth it.
Your cryptocurrencies could be worthless
Bitcoin may hit $10,000 on its way to zero.
Jim Rickards
A few people have mentioned Bitcoin going to zero. Investor Jim Rogers and Jeff Schumacher, founder of BCG Digital Ventures have said this. You probably know this will never happen. There are too many people in this space with only more joining this market every day, many for the very first time.
However, there are some cryptocurrencies that have gone to zero. The world really doesn’t need 7,282 cryptocurrencies are reported by CoinMarketCap. I honestly think a handful is good, but the others are hoping you’ll bail them out to keep them alive.
One Coin and Bitconnect lost money for investors. The Conversation reported over 1,000 cryptocurrencies have already failed as of November 2019. Then you also never know when an exchange removes a cryptocurrency from their platform. This happens almost every week.
The investors of these cryptocurrencies have basically lost their money. So in a sense, these cryptocurrencies have basically gone to zero as you have lost your investment forever. These are not happy times for these investors.
Swing trading enters the picture
The key is not spending time, but in investing it.
Stephen Covey
I still HODL my cryptocurrencies but wanted to swing trade. Instead of swing trading to make a profit, I wanted to swing trade and buy more cryptocurrencies. I had to set my criteria to sell since the tax law is unforgiving for swing traders. I set my goal to sell a cryptocurrency when it made a 20% return.
The 20% return is more than enough to cover any taxes since short term trades requires more money from the IRS, the US tax agency. I could have sold for much less, but then it starts to get tricky, and I may end up owing a lot more money to the IRS than I wanted.
The first trade I executed was selling Digibyte (DGB). Digibyte made a nice run last month, and my investment was up 20%. I didn’t sell all of my Digibyte since I was a newbie selling in this market. Also, you have to consider, what if the cryptocurrency goes up higher than what you thought? You’ll miss out on these gains.
To be safe, I sold 54,157 Digibyte or the equivalent of 3.59 Ethereum. This was the total amount I had. I was ready to buy back in and reinvest the money. The question was, at what price? The market has slowing reached higher highs and higher lows, so I had to buy back in before the market jumps back up again.
When I bought back in, this was only two days later, and I was able to gain 3,000 more Digibyte. This was a nice little return with very little effort other than keeping my eye on the market price.
Can you still make your millions through HODL?
If you HODL your cryptocurrencies, there is nothing wrong with that. You can continue to buy and hold. In general, this strategy has been used to create millionaires and billionaires in the investment market.
Many investors were in the cryptocurrency market using HODL to increase their cryptocurrency assets. This works out very well and requires less trading for you. Also, this is less headache that you have to do dealing with your taxes.
If you chose this method, you still need to have a point when you will sell your cryptocurrencies. Just as the Bitcoin Whales buy and sell, you should do the same. Eventually, you will sell your cryptocurrencies, and that leaves us to the next topic.
What is your exit strategy for cryptocurrencies?
Always start at the end before you begin.
Robert Kiyosaki
With every cryptocurrency you buy, you need to know when to sell. You need an exit strategy. If you hold your cryptocurrencies too long, you’ll miss all the gains you made. This is what happened to many in the last bull run in 2017.
I don’t think you’ll hold your cryptocurrencies forever. Currently, there isn’t a relative you can leave your cryptocurrencies unless you have opened your account up through a valid investment brokerage. You don’t want to get into a situation where you pass away and no one has access to your cryptocurrency portfolio.
This happened to the investments held by the Canadian cryptocurrency firm Quadringa as the founder passed away due to Crohn’s disease. When he died, he left with the password to accounts for the firm and $142 million in cryptocurrency assets of 76,000 investors. Don’t let this be you.
Whether you HODL for a few years or swing trade, always have an exit strategy to take your gains off paper. Try not to be too greedy and wait for Bitcoin to reach $200,000 unless you have taken profit before then. I am using $200,000 as an example but use what number works for you.
Keep a good record of your trades
Successful investing is about managing risk, not avoiding it.
Benjamin Graham
When you do swing trade make sure you keep record of when bought and sold your cryptocurrencies. Some platforms provide you the information you need, but others don’t. In these cases, you need to keep a good record of your transactions.
You can create your own tracking system or search online for various examples. Make sure you keep a good record of your trades. Every transaction you make needs to be recorded.
Show me the money!
Just as Tom Cruise said his famous line in Jerry Maguire, “Show me the money,” that is why you are investing in cryptocurrencies, right? Well, take your money off the exchange. Enjoy your profits. Pay some bills. Take a nice vacation. Enjoy the money you made.
With the rate the price of Bitcoin is going, who really knows when the cryptocurrency will reach a new all-time high. It could be this year, next year, or five years from now. No one really knows.
Take your profits and enjoy it. There is a lot you can with your investment. Don’t be greedy and let your cryptocurrencies sit on the exchange forever. Have a plan with what you want to do with your investment.
Do you swing trade, HODL, or do a combination of the two?
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Tom Handy is a top writer on Medium, former Quora writer, and father of two kids. He retired from the Army and sits on several non-profit boards. You can find him on Twitter @tomhandy1.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
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