For the purpose of this post, I'm going to skip past the obvious
I should not have to tell you to Buy Low and Sell High. I should not have to tell you to abandon a sinking ship A.S.A.P. I'm going to assume that you already know things like that.
This post is for the crypto investor who is holding a portfolio of similar looking coins and wants to know what he or she should sell in order to raise funds. These funds could be used to take profits, to invest in a new crypto or for any other reason; it doesn't matter.
From http://www.thebluediamondgallery.com/typewriter/s/sell.html, original photo by Nick Youngson, used under the CC BY-SA 3.0 license.
I NEED MONEY! Which crypto is best to sell?
To understand this post you must first read my post from yesterday. The one that told you what to Buy or Hold. We're going to use a similar method to decide what to sell. Go read that now...
... this is how you decide what to sell
Using your standard ratio for investing in a coin (you did read yesterday's post, right?), apply the ratio for each coin you are considering selling.
For example: using the example from yesterday - we had a ratio of 1:2 000 000. Let's say I have 50 NEO (NEO) [Maximum market cap 100 000 000] and 900 EOS (EOS) [Maximum market cap 900 000 000].
According to my ratio of 1:2 000 000, I should therefore hold about 50 NEO (100 000 000 / 2 000 000 = 50) and 450 EOS (900 000 000 / 2 000 000 = 450).
My NEO amount is exactly where I want it - at 100% of what it should be, but I hold much more EOS - 200% of what I typically want to hold of a coin.
If I want to raise money right now, what do I do? I don't sell my NEO, it's right at the level that I want it to be. But looking at my EOS I see that I have twice as much as I need. Easy solution: sell half of my EOS. I have now raised funds and maintained my coins at my optimal holding ratio.
Exceptions
Like yesterday, you don't have to sell if you hold much more of one coin than your ratio says you should. Perhaps you really like platform coins (like I do) and you decide that you want to hold double your normal ratio when it comes to those. You decide not to sell your EOS. That's fine too. This is only a guideline to assist you in decision making.
Let me show you how this works in the real world by means of an example:
Example
As previously discussed, I split up my rather diverse portfolio by "holdability". I try to never sell my "long-term hodl" and my "strong hodl" coins, unless I really have to. I have a group of coins I use for speculating. These are "weak hodls" and are the coins I would first look at if I decided that I needed to sell something.
If you're interested, you can look at my three part series of all of my coins split by their "hodl" levels. Part 3 contains all my "speculate" level coins and also contains links to Parts 1 and 2 (where you will find all the coins that Bit Brain holds onto like a Koala Bear on steroids). Find "COINS I HOLD - Part 3" here.
The following table is extracted from the spreadsheet I use to track my crypto portfolio. It features all the coins that I currently list as "speculate" coins and the percentage next to each is the percentage of my normal investment ratio.
As you can see, I don't always stick to my ratio, especially with my speculate coins.
Remember that no matter what the prices do, those percentages won't change because they work off a fixed ratio: the number of coins I hold to the maximum supply of the coins in question.
Practical example: which of those would I sell? I'm going to assume that all these coins are the same to me and that I don't particularly want to get rid of any of them. I'll look at them line by line and explain how to use these figures:
- Library credits - 36.9% - I have too little LBC. I should try to buy more (provided that I want to keep holding it long-term).
- I should not sell LBC.
- Oyster Shell - 204.6% - I have twice as much SHL as I need. This is a good candidate to raise funds from.
- I can sell half my SHL.
- Golem - 10% - I have far too little GNT. If I'm serious about holding it then I must buy a lot more.
- I should not sell GNT.
- Kin - 1.7% - I have hardly any KIN. Why bother even holding this little?
- I hold so little KIN that I might as well sell it.
- Nebulas - 3.3% - My NAS is the same as my KIN. Too little to bother holding.
- I hold so little NAS that I might as well sell it.
- Arbitrage Token - 1081.7% - I hold over ten times more ARCT than I normally should.
- I can sell 90% of my ARCT, but since this normally only happens with very low market cap coins, it will be a good idea to hold it longer until the price rises.
- Gas - 7.6% - I hold very little GAS so I can either buy a lot more, or just sell what I have.
- Sell GAS if I can find nothing more suitable.
- Litecoin - 0.1% - I don't have to even mention this.
- I hold so little LTC that I can ignore it. It's probably not even worth selling.
In summary then:
- Selling half my Oyster Shell is a good way to raise funds. So is selling off my Kin and Nebulas.
- Selling my Litecoin won't be worth it.
- I can sell Gas if I really need funds.
- Arbitrage token is an interesting example. I like to invest in low market cap coins while they are still cheap. This is exactly what I did with ARCT and it is why I could afford 10x my normal amount. ARCT is still ridiculously cheap so I don't want to sell it yet. In the future, IF it goes up a lot in price, then it will definitely be a good coin to sell to raise funds.
Conclusion
Like yesterday's post this is a guideline - I must stress that. It also assumes that all coins are equal i.e. it does not account for news, current coin performance or personal preferences. You need to factor those in for yourself. I'm happy to hold 10x more ARCT than normal because I got it cheap and it hasn't risen in price yet. I just need to remember that.
I hope this helps you decide what to sell. I used a real example; the coins I said I would sell are the coins that I will sell if I need to raise funds right now. I hope this helps you a little with your decisions, especially if you have a portfolio as diverse as mine!
Yours in crypto,
Bit Brain
DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.
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Personally, I usually end up following the buy high.... lose patience.... sell low strategy! The only thing I have done recently is reduce the amount of different coins I have during this slump and mostly hold coins that give a dividend even in a downtrend like NEO & GAS.
Good strategy. I wouldn't bother with the GAS too much, but keep that NEO!
Interesting...I like this kind of thinking. Takes emotion out of the equation.
Yeah, now if only I could always practise what I preach...
Haha...I tell myself the same all the time.
Glad to hear I'm not the only one!
You have a system. I never looked at it that way but the system adds structure.
It's more a "tool" for me than anything else, as I said above, a guideline. But read in conjunction with yesterday's post - yes - it's part of a system I use. Essentially it guides my purchases, sales and rebalancing attempts. All I need to remember is my ratio.