Hi CoinPanel Community! Today we want to give you insights on how to optimally exit a trade taken for a new or novice trader to get optimal returns at the peak of the cryptocurrency when it’s near the 52-week high or all-time high.

Money management is the main issue as what usually happens is traders enter the trade near the demand zone but never decide on the exit. These traders often end up making low or negative returns as planning the exit is as important as planning the entry. There are various ways to plan an exit strategy.

The basic and most followed strategy while trading is to place a stop loss and target trigger prices. Stop-loss is an exit strategy in which there is a price set by the trader at which the cryptocurrency is going to be sold by the exchange on the day when the price reaches that level. This makes sure that the trader only has to get a certain loss if the trade goes the other way than it was expected.

From the trade above we can learn that the trader can take entry when the price moves above the resistance level marked by the arrow as it crosses its all-time high level and the trader can have a stop loss set at the level of the horizontal line below the entry.

Limit orders on the other hand help the trader in determining a level where the exchange will automatically sell the cryptocurrency when it reaches that level. This makes sure the trader gets the profit ratio he planned prior to taking the trade and does not lose out on it if it reaches those levels and moves back.

 When the price is bought at support levels along the horizontal line below, the trigger price should be set at the arrow-marked levels to get safe returns. This can be clearly made as a supply zone or where the cryptocurrency holders tend to sell it the most which should be understood by the trader.

Certain parameters to determine your exit:

1. How long do you want to be in the trade?

If a trader wants to buy the cryptocurrency for the long term let’s say more than a month, then the trader should look at targets that will be achieved in a long-time frame and should not set tight stop-loss levels which can be affected by minor market volatilities.  

Whereas if the trader wants to buy a cryptocurrency for the short-term, they should look at the short-term achievable targets, and the stop-loss should be tight which helps the trader get a favorable risk-to-reward ratio.

2. Risk levels accepted by the individual

The risk appetite of an individual matters a lot when determining exit in a trade. The exit should be well planned. Risk management is a big part of money management. Finding important levels and keeping appropriate levels of stop-loss so the cryptocurrency market volatility won’t cause an early exit.

When a cryptocurrency breaks its all-time high it usually tends to give mega returns of 50-100% or trackback from those levels back to its support or move sideways. The same goes with the support level: when a cryptocurrency reaches its support level it is highly likely it moves back up.

Determining the exit in the trade is even more important than the entry point. The exit determines the profit the trade makes. The better the trader plans the exit the more confidence it gains in future trades. We hope this article helps you in building-up confidence in you to start your crypto trading journey.

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