What is your cyrpto selling strategy?

As of November 22, the crypto market cap is $ 3.37 Trillion. If you have bought your crypto at the right price, many of crypto invenments are trying green with 2x to 5x overnight. Still there are some coins that has not achieved full potentials. When trading crypto, which selling strategy is low risk and higher profit? Let’s say I bought several positions of Doge coin. For example, $ 100 position at $ 0.12 per Doge, $ 50 at 0.20, $ 70 at 0.35. Now the price is $0.40 but I expect it will go upto $0.70. But I want to sell some when price reaches $0.55. Which position should I sell first?

To approach this situation, let’s consider balancing risk reduction with profit maximization. Here are a few strategies for prioritizing which position to sell:

1. FIFO (First In, First Out):
   Selling the earliest position (the one bought at $0.12) when the price reaches $0.55 would yield a significant profit while ensuring you keep some positions for potential future gains if the price goes higher. This way, you lock in profit without taking on much additional risk since you’ll retain your higher-cost positions, which have less unrealized profit risk.
2. Highest Cost Basis First:
   Selling the position bought at $0.35 when the price reaches $0.55 might reduce risk more directly, as it allows you to offload your highest-cost position first. Although it gives less profit per unit, this strategy reduces your exposure to losses if the price drops back below your average cost basis.
3. Blended Strategy:
   Sell a portion of each position proportional to your holdings. This way, you lock in profits across all entry points and keep some of each position in case the price continues to rise.
4. Profit Lock-in Strategy:
   Calculate a target profit percentage (e.g., a 100% return). In your case, selling the position bought at $0.20 or $0.35 first might give you a quicker return on investment if you aim to secure a certain profit per unit.

A common strategy combines these approaches: initially sell your highest-cost position to reduce risk, then gradually sell your lower-cost positions as the price continues upward, securing profits while leaving potential for gains. This will allow you to capture profit in increments while managing exposure.

Let’s break down your scenario with calculations for each strategy. Here’s your initial setup:

• Position 1: $100 at $0.12 = 833.33 DOGE
• Position 2: $50 at $0.20 = 250 DOGE
• Position 3: $70 at $0.35 = 200 DOGE

Total: 1,283.33 DOGE

The current price is $0.40, but you expect it to reach $0.70. You want to sell some DOGE when the price hits $0.55. Here’s how each strategy would look:

1. FIFO (First In, First Out)

Sell Position 1 at $0.55:

• Sell 833.33 DOGE from the first position.
• Proceeds = 833.33 DOGE * $0.55 = $458.33
• Cost basis for this position = 833.33 DOGE * $0.12 = $100
• Profit = $458.33 – $100 = $358.33

Remaining Holdings:

• 250 DOGE from Position 2 and 200 DOGE from Position 3, which you can still hold for potential gains up to $0.70.

2. Highest Cost Basis First

Sell Position 3 at $0.55:

• Sell 200 DOGE from the third position.
• Proceeds = 200 DOGE * $0.55 = $110
• Cost basis for this position = 200 DOGE * $0.35 = $70
• Profit = $110 – $70 = $40

Remaining Holdings:

• 833.33 DOGE from Position 1 and 250 DOGE from Position 2, giving you more exposure to potential price increases.

3. Blended Strategy (Sell a Proportion from Each Position)

Let’s say you decide to sell 500 DOGE in total at $0.55, proportional to each position.

Breakdown:

• Position 1: 833.331283.33×500≈324.99 DOGE\frac{833.33}{1283.33} \times 500 \approx 324.99 \, \text{DOGE}1283.33833.33​×500≈324.99DOGE
• Position 2: 2501283.33×500≈97.5 DOGE\frac{250}{1283.33} \times 500 \approx 97.5 \, \text{DOGE}1283.33250​×500≈97.5DOGE
• Position 3: 2001283.33×500≈77.5 DOGE\frac{200}{1283.33} \times 500 \approx 77.5 \, \text{DOGE}1283.33200​×500≈77.5DOGE

Proceeds:

• Position 1: 324.99 DOGE * $0.55 = $178.74
• Position 2: 97.5 DOGE * $0.55 = $53.63
• Position 3: 77.5 DOGE * $0.55 = $42.63
• Total Proceeds = $178.74 + $53.63 + $42.63 = $275

Cost Basis:

• Position 1: 324.99 DOGE * $0.12 = $39
• Position 2: 97.5 DOGE * $0.20 = $19.5
• Position 3: 77.5 DOGE * $0.35 = $27.13
• Total Cost Basis = $39 + $19.5 + $27.13 = $85.63

Profit:

• Profit = $275 – $85.63 = $189.37

Remaining Holdings:

After selling 500 DOGE, you have 783.33 DOGE left.

4. Profit Lock-In Strategy (Target a 100% Return)

Sell Position 2 at $0.55:

• Sell 250 DOGE at $0.55.
• Proceeds = 250 DOGE * $0.55 = $137.50
• Cost basis = 250 DOGE * $0.20 = $50
• Profit = $137.50 – $50 = $87.50

Remaining Holdings:

• 833.33 DOGE from Position 1 and 200 DOGE from Position 3, giving you good potential for additional profits if the price rises to $0.70.

Summary

Each strategy balances profit and risk differently:

• FIFO locks in the highest profit but keeps your higher-cost positions.
• Highest Cost Basis First reduces risk by selling your highest-cost position.
• Blended secures a diversified profit from each position.
• Profit Lock-In allows you to lock in a target profit while keeping other positions for further growth.

The best strategy depends on your risk tolerance and profit objectives.

If the price drops after reaching $0.55 instead of going up, here’s how each selling strategy could impact your holdings and profits:

1. FIFO (First In, First Out)
   By selling the Position 1 (the one purchased at $0.12) at $0.55, you would have already locked in a large profit on your lowest-cost holding. If the price drops afterward, you still have your higher-cost positions (purchased at $0.20 and $0.35), which are closer to breakeven at $0.40. This minimizes potential losses, as you’ve already secured a profit cushion.
2. Highest Cost Basis First
   Selling Position 3 (the one purchased at $0.35) at $0.55 reduces the risk since you’ve sold your highest-cost holding at a profit. If the price falls, your remaining lower-cost positions still have some room for profit or at least breakeven, mitigating losses. This approach is helpful if you’re concerned about the downside risk, as it takes the highest-cost position off the table first.
3. Blended Strategy
   Selling a portion from each position at $0.55 (such as 500 DOGE proportionally) lets you lock in some profit across all holdings, creating a buffer if the price declines. However, it also means you retain a partial position in each entry point, so you still carry some risk if the price continues to fall sharply. This strategy is moderate in terms of risk management because you’ve reduced exposure but haven’t locked in the highest possible profit on your most profitable position.
4. Profit Lock-In Strategy
   By selling Position 2 (purchased at $0.20) at $0.55, you lock in a 100% profit on this particular position. If the price drops afterward, you still have Position 1 (at $0.12) with substantial profit potential, even at lower prices, and Position 3 (at $0.35), which could be closer to breakeven at $0.40. This strategy allows you to retain some high-profit potential while reducing risk on a mid-cost position.

Summary of Each Strategy If Price Drops Post $0.55

• FIFO: Minimizes loss impact by securing a large profit on the lowest-cost position.
• Highest Cost Basis First: Reduces risk by selling the highest-cost position first, which is more vulnerable if prices drop.
• Blended: Spreads risk and profit, partially reducing exposure while still retaining all positions.
• Profit Lock-In: Secures a targeted profit, keeping some potential for gains but with reduced downside risk on higher-cost positions.

Recommended Approach if You’re Concerned About a Drop: The Highest Cost Basis First or Profit Lock-In strategies may be the most prudent if you anticipate volatility or a decline after reaching $0.55, as they prioritize risk reduction by selling higher-cost or mid-cost positions first.