When to Take Profit vs. HODL?

Every crypto trader eventually faces a common question: should I sell now and lock in profits, or keep holding (HODL) for the long run? While this decision should be strictly yours, we can draw your attention to some points that you should take into consideration before making the decision to either sell for profit or continue to hold.

So, let’s understand both concepts.

What do we mean by “taking profit”?

This refers to when traders sell part of their crypto when its value increases to secure gains, which they can either use or invest again.

Usually, when the price of a certain coin that a trader owns reaches a target price that the trader had previously set, they tend to sell and make profit. Also, some traders might need to liquidate their crypto (sell them to get cash) for personal use or if the market seems to be moving rapidly and they act on their sense of FOMO (fear of missing out).

What does “HODL” mean?

“HODL” is a crypto term for “hold on for dear life,” which refers to when traders store their assets long-term regardless of price changes. Many traders choose Bitcoin or Ethereum to HODL because of their perceived growth potential.

This strategy is used by traders who believe in the long term potential of certain crypto assets, and those who want to also avoid emotional trading or making rash decisions during market volatility.

The decision to choose between these two strategies depends on your goals, risk tolerance, and the market conditions. Regardless, both strategies work best with a clear plan.

As an in-between strategy, some traders adopt both strategies at the same time. They would only sell a portion of their holdings, while keeping their long-term investments.