MetenaTake-profit: definition and example
A price level set in advance, at which you sell all or part of a winning position.
Definition
Deciding the selling price before buying spares you from deciding it when the market is rising and everything pushes you to wait a little longer. An upside exit plan specifies two things: the price, and the share of the position sold.
Selling in stages is the most common form: a fraction sold at each level reached. It locks in part of the gain and leaves the rest exposed if the rise continues. Selling all at once is simpler, but it forces you to aim precisely.
Taking profit does not assume the thesis is wrong. It brings a position that has grown too large back to the size planned in the allocation and turns an unrealised gain into a realised one.
Worked example
Bitcoin bought at $50,000. Plan: sell 25% of the position at $75,000, 25% at $100,000, and keep half as long as the thesis holds. At $100,000, the two sales have recovered 87.5% of the initial stake and half of the position is still held.
In Metena
In Metena, you note your take-profit levels on each position, next to the stop. A sale planned by your rules and then carried out counts as a decision in line with your plan in your discipline score.
Notify me at launchRelated terms
- Stop-loss
- A price level set in advance, below which you sell to limit the loss on a position.
- Rebalancing
- Adjusting the portfolio to get back to the planned allocation when one holding has risen or fallen too far compared with the others.
- Average cost (cost basis)
- The average price at which you bought an asset, fees included. Above that price, the position is in profit.
- Risk/reward ratio
- The ratio between what a position can lose you, down to the stop, and what it can gain you, up to the target.
Related guides
- When to sell your crypto: writing your exit plan
- Take-profit levels, stop, invalidation condition, rebalancing: four reasons to sell that should be written before buying, with worked examples.
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Notify me at launchEducational content. It is not investment advice. Crypto-assets carry a high risk that can go as far as the total loss of capital.