How to Take Crypto Profits! (BEGINNER’S GUIDE)

Summary

This video guides crypto enthusiasts on how to take profits by outlining key strategies such as selling all at once, scaling out, and the 'drisk and hold' method. It highlights the difference between paper profit and realized profit and emphasizes the importance of securing crypto through cold wallets. Viewers are also introduced to converting crypto into stablecoins, fiat, or other cryptocurrencies, along with tips on using exchanges or decentralized exchanges (DEXs) for transactions. The video concludes with a reminder to be mindful of fees, taxes, and security when taking profits in the crypto market.

Takeaways

• 😀 Don't let your crypto profits slip away—learn how to take profits before the market turns.
• 💰 Realized profit is when you sell and lock in your gains, unlike paper profit which is just an unrealized increase in value.
• 🔀 Consider selling your crypto in portions to minimize risk while still benefiting from future price increases.
• 💼 Secure your profits by withdrawing your crypto from exchanges and storing it in cold wallets for better security.
• 🔐 A cold wallet is safer than leaving your crypto on an exchange, protecting your funds from hacks and technical failures.
• 🧐 If you're unsure about cold wallets, watch the next video for a step-by-step guide on how to use and choose the best one.
• 📊 Stablecoins like USDT and USDC offer protection from market volatility, ideal for locking in profits while staying in crypto.
• 💵 You can also cash out into fiat currency (e.g., USD) for immediate use but leave the crypto market.
• 🌍 Converting to other cryptocurrencies like Bitcoin can help you stay in the market while reducing exposure to a single coin's volatility.
• ⚖️ Every time you sell or swap crypto, it’s a taxable event, so be aware of capital gains taxes when cashing out.
• 🌐 Centralized exchanges are user-friendly but come with risks, such as potential freezes or outages of your account.
• 🔄 Decentralized exchanges (DEX) offer more control but are more complex and don't support direct bank withdrawals.

Q & A

What is the difference between paper profit and realized profit in crypto?

Paper profit refers to the unrealized gain you see when the value of your crypto increases, but you haven't sold it yet. Realized profit is the actual profit you lock in when you sell your crypto.

What are the advantages of selling all your crypto at once?

Selling all your crypto at once guarantees you lock in the profits immediately. However, this strategy may cause you to miss out on potential future gains if the price continues to rise.

How does the 'scaling out' strategy work in crypto trading?

Scaling out involves gradually selling portions of your crypto over time. This allows you to take profits while still benefiting from potential future price increases.

What is the 'drisk and hold' strategy in crypto, and why might it be beneficial?

The 'drisk and hold' strategy involves withdrawing your initial investment and leaving the remaining crypto in the market. This reduces your risk while still allowing the rest of your investment to potentially grow.

Why is using a cold wallet important for securing crypto?

A cold wallet provides security by storing your crypto offline, making it less vulnerable to hacks, exchange downtime, and other online risks. It’s essential for long-term storage.

What are the risks associated with leaving crypto on exchanges?

Exchanges are vulnerable to downtime, account freezes, or hacks, which could result in loss of access to your crypto. It's safer to store long-term holdings in a cold wallet.

What are the benefits of converting crypto profits to stablecoins like USDT or USDC?

Stablecoins, such as USDT or USDC, are pegged to fiat currencies like the US Dollar, offering stability and protection from crypto market volatility, making them a safe option to store profits.

What should you consider before converting crypto profits to fiat?

Converting crypto to fiat can expose you to missing out on future growth. However, if you need cash for real-world expenses or want to reduce risk, converting to fiat might be a good option.

How do decentralized exchanges (DEX) offer more security compared to centralized exchanges?

Decentralized exchanges operate using smart contracts, meaning they are not dependent on a central authority and are less prone to downtime or security breaches, offering more control over your funds.

What fees should you be aware of when taking profits from crypto?

When taking profits, be aware of exchange fees (0.25% to 1.5%), slippage fees (price changes during transactions), blockchain fees (which vary by network), and potential capital gains taxes, which range from 12% to 35%.