Taking out initial investment as a means to reinvest?

[bennylava]

I'd like to lay out some thoughts and hopefully you guys can help me sort through them. I'm still a beginner but I'm trying to learn from my past mistakes. And I've noticed that many people (if not most people) will sell half of a given coin, once their initial investment is covered. So basically, when they've doubled their money.

A hypothetical example to help me understand: If you bought $100 worth of coin X at 50 sats, you would then sell half of the coins, once it reached 100 sats. Because your initial investment would be covered. And you're still invested $100 into the coin, you just have half the amount of coins now. But you've got $100 extra to play with. Likely in bitcoin, which is what you traded half of coin X for once it doubled in price.

But, you are interested in long term investing in this coin. You like coin X, think its a good project, and have done your research and decided that you want to be a long term investor in coin X. And you want to acquire as much of coin X as you possibly can. That way 5 years from now when its time to sell, of course you make a lot more money because you have a lot more coins to sell.

So is selling off half, to cover your initial investment, a viable strategy when it comes to long term investing? You could just wait until you saw coin X plummet back down to 25 sats, or 35 sats, or whatever, and take your $100 and buy more of coin X. In this way, you actually end up with more of coin X, than if you had never sold at all. Is doing this a good idea? Or is it too risky? Because perhaps coin X never goes back down to 25 sats. That has been my fear, and why I have yet to be able to convince myself to do this. What are your thoughts and opinions on this? As a strategy for acquiring more of a coin you want to hold for the long term.

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[Pursuer]

there are lots of different strategies when it comes to investment and managing your money. it is not really easy to say if one strategy is good and the other bad. not generally anyways. sometimes this strategy you described is a good one for certain coins under certain circumstances but not good always.

I usually use this strategy if I want to get the money out for good. meaning if I see the risks of investing in some coin is high so I cash out the initial investment and keep the profit and then continue working with that. and never invest that initial amount ($100 in this case) back in it. and it is a viable strategy!

but in some cases for example when investing in bitcoin I invest the profit back in. in other words I keep the profit in bitcoin not in fiat. for example I buy 0.01BTC price goes up and I expect a correction, I sell and buy back in the dip with the money I got and receive 0.013BTC

[bennylava]

there are lots of different strategies when it comes to investment and managing your money. it is not really easy to say if one strategy is good and the other bad. not generally anyways. sometimes this strategy you described is a good one for certain coins under certain circumstances but not good always.

I usually use this strategy if I want to get the money out for good. meaning if I see the risks of investing in some coin is high so I cash out the initial investment and keep the profit and then continue working with that. and never invest that initial amount ($100 in this case) back in it. and it is a viable strategy!

but in some cases for example when investing in bitcoin I invest the profit back in. in other words I keep the profit in bitcoin not in fiat. for example I buy 0.01BTC price goes up and I expect a correction, I sell and buy back in the dip with the money I got and receive 0.013BTC

Yeah I could see where some coins, it would be a bad idea. But when you say:

And never invest that initial amount ($100 in this case) back in it.

Do you mean that you never invest what you made, back in? That $100 that you skimmed off the top, never goes back in? But what if its a solid coin? That you know is just going to go right back up, after the market recovers from the crash?

[odolvlobo]

The rational reasons for selling part of an investment would be to reduce risk and to maintain diversification. While the purpose of selling to cover your initial investment is to reduce risk, the amount sold is not based on reason.

[Heidim]

I am married to a lot of coins.. So those I will keep for at least 5 years. The other coins, I will take profit and fork into new coins. But its really is up to you how you do it.

[amir.malik]

That's up to you. What they are doing is making sure that they will not incur loss. Since they were able to get the amount they invested in, there is no chance of losing the capital/initial investment. You can do what you want with your investment, but remember that they come with risks.