Preface

In the crypto world, entering a position is something anyone can do—it’s the most basic move. But exiting? That’s the dividing line between seasoned players and inexperienced retail investors. A trader might guess the right direction, choose the right coin, and still lose money—simply because they don’t know when to walk away or when to cut their losses.

Entry by judgment, exit by discipline

Have you ever encountered any of the following situations?

• Initially made 30% profit, hesitated to sell, ended up back to square one
• Originally, it was just a little loss, and I wanted to wait to see if it would rebound, but the result became deeper and deeper
• While others are celebrating, I always buy at high points and sell at low points.

These situations don’t happen because you’re not smart enough—they happen because you’re undisciplined. In the crypto space, if you don’t plan your take-profit and stop-loss points, your gains will forever remain numbers on a screen, and your losses can turn into a bottomless pit if you lack self-control.

What is take profit?

Take-profit means setting a specific price or percentage gain in advance. Once the price hits that point, you lock in profits and exit—no hesitation. It’s not about predicting further gains or being overly bullish. It’s a strategy point that should be set before you even enter a trade.

1. Why take profit?

Because markets never go up forever. Even the strongest trends retrace. Without a take-profit point, your +80% gain might shrink to +5%, or even reverse into a loss.

2. How to set take profit?

Here are several common methods:

• Fixed Gain Method: Set a target return, such as 20%, 50%, or 100%, and exit in phases.
• Technical Level Method: Exit or reduce your position when the price hits key resistance zones (previous highs, trend lines).
• Partial Take-Profit Method: Sell off portions every time the price reaches a certain gain to reduce emotional burden.
• Strategic Take-Profit Method: Based on overall portfolio allocation—if a position becomes too dominant, rebalance proactively.

Think of take-profit as reallocating capital, not leaving the market. After securing profits, don’t rush to go all-in on the next trade—taking a break can also be part of the strategy.

What is stop-loss?

Stop-loss means acknowledging a wrong judgment and exiting a position while the loss is still manageable, to avoid being crushed by the market. Many people misunderstand stop-loss as “admitting defeat,” but seasoned traders know it’s actually the last straw that protects your capital. Without it, you might not even be able to participate in the next opportunity.

1. Why do most people not want to stop loss?

• reluctant to accept
• Hold on to the illusion of a rebound
• Feel like it hasn’t reached real support yet
• Hope to exchange coins and add positions can average down

Almost everyone has had these thoughts, but the reality is that the longer the loss is dragged out, the deeper it becomes, and the chances of a rebound also become smaller.

2. How to set stop loss?

The following are several common methods:

• Fixed Percentage Method: For example, each trade can tolerate a maximum loss of 10-15%
• Technical analysis: Breaking through important support, trend line loss, and other technical breakthroughs mean stop loss
• Time stop loss: voluntarily exit in case of long sideways, lack of positive news, and low trading volume
• Overall capital stop-loss method: When the overall loss reaches a certain percentage of the capital (e.g. 20%), make comprehensive adjustments or suspend trading

Stop loss is not cutting meat, it is cutting off wrong trades to preserve the remaining chips to survive.

Take profit/stop loss is the art of capital allocation

In addition to setting take profit/stop loss for individual trades, a more advanced strategy is to think from the perspective of overall capital allocation:

1. Position allocation

• Do not overweight a single currency
• Adjust position weight according to volatility
• High-risk currencies set stricter stop-loss

2. Cost Management

• Entering in batches can reduce entry pressure
• When the loss touches the stop-loss point, one should cut the loss decisively and exit instead of adding to offset the position.

3. Psychological Capital Management

• Treating losses in the account as a strategy error, not a failure in life
• Accept the uncontrollability of the market and do risk control that you can control

Common Mistaken Mindsets

• It should bounce after a little more support: usually it won’t
• Close to the stop-loss price, why not wait and see: it usually gets worse.
• I’ve lost so much already, selling now won’t make a difference: this is a vicious cycle
• I have earned a lot, even if it rises, it won’t make much difference: then it goes from +100% to +5%

Conclusion

In this 24/7 trading world full of explosive news and amplified emotions, no one gets it right every time. The only thing you can do is make sure you can afford to lose and be strong enough to hold your wins. Take-profit isn’t greed, and stop-loss isn’t cowardice—they are essential tools for long-term survival in the crypto market. Write your strategy before entering, stick to your discipline during volatility, and take full responsibility for both your profits and your risks.