How to manage Bitcoin longs?

The BTCUSD longs were sold well before the $20,000 peak was hit last year on a trend line break. See here. However, there was a number of questions about BTCUSD. Some people have bought in at very low prices and are deep in profit. That sounds great, but strangely it can be quite stressful to know what to do with a trade deep in profit. Furthermore, when markets behave like BTCUSD you can see large profits evaporate nearly as quickly as they appear. So having a plan is important. This article will give you some ideas how to manage you profit.

Techniques for managing your profit

1. Trail your stop beneath the daily chart trend line

Take a look at the chart below. You will see the daily trend line.

This is an obvious technical place to trail your stops.

Advantages: If the trend carries on you are in and stops can be trailed to reflect higher prices.
Disadvantages: The stop beneath the trend line is around $30,000 which is considerably below current prices.

2. Take profit now

This would have been a great trade and you need to book those large profits when they come.

Advantages: Remember that markets don’t double every day of the week, so take those gains.
Disadvantages: If price rallies to $100,000 you may wish you had held on. However, you could argue there is more to lose by holding than there is to gain by closing the trade.

3. Take profit at retest of recent highs

Advantages: This seems a good compromise and a decent level.
Disadvantages: If BTCUSD is a new digital currency then get in early. That won’t help you if you have closed your positions. The other disadvantage is if price does not go back to recent highs.

4. Trail stops underneath weekly lows

Advantages: You will be in for a large price shift higher if it comes.
Disadvantages: You will get taken out on the eventual pullback whenever it does come.

Whatever you do it is best to commit to one approach. Also realise there is no perfect answer to the question on when to take profits, as no-one has a crystal ball to see future prices. So, if you do take a profit that turns out to be too early, don’t be hard on yourself. Picking tops and bottoms is often more about chance than skill.

Also remember if you are in the UK that once you close your position you will be unable to open it again due the FCA regulation change. So, think carefully.

Learn more about HYCM

---