How would you protect your potential profits?

[uninterestedparty33]

I want to preface this post by saying that I have not studied economics, and these are just my blissful wishes.

For a while this little scenario has been playing in my head:
Say you have 1 Bitcoin. The price is say $50k. At any point in time you sell, you will get 50k, if the price, however, drops below to say $40k, you have a perceived loss of $10k, yep you still have your 1 BTC, but you can buy less USD than you could before. There will come a day when Bitcoin is not valued in USD, but until then, we will stick to the basics.
When stablecoins were first introduced, I did not read about them nor understand them, and ignorantly thought it was a tool to lock the price of a pair such that if the price did drop by $10k, you'd not be unaffected but if it increases, your portfolio would still rise. Because trading is a zero sum game, this is impossible but I still want to continue.

The same goes if we reverse the situation. If I sell 1 Bitcoin at $50k, yes I will have $50k, but if the price increases of Bitcoin to $60k I still have a perceived loss of $10k. The reason I say perceived is because you cannot lose something you never had, right? But some people like me don't experience situations like this as simply perceived loss, for me it's a real loss.
If I decide to buy back Bitcoin with $50k, while the price is $60k, I can only buy 0.83btc, all of a sudden I have a 0.1666 btc perceived loss.

Wouldn't it have been great if my money would still somehow buy me that 1BTC? It's just a dream because if this was possible, you'd have a way to infinitely multiply your holdings.

With that story out of the way, what methods exist, if they even exist, to reduce this perceived loss? Hedging?

[jackg]

There are a bunch of things you can do.

The first would've setting a stop loss or trailing stop loss. If you don't think the price will go below $32k you could set it as a stop loss or set an alert to transfer your coins at a slightly higher price.  Of course, you're still taking on some sort of loss but it may be a loss you're happier to incur.

The other options that are similar:
Start selling at certain predetermined limits. If you're confident the price will go to $90k, sell some then (just an example price target).  Then sell some at your next target and continue.

As an improvement on the last idea, sell half at a certain price and 2x leverage the rest (it's riskier but if you have a stop set fairly high - unlikely to be triggered - then it might work). But also note that selling anything will raise your liquidation price.

[arufox]

So you must focus on the BTC pair, you can buy altcoin using Bitcoin and sell it for profits also using Bitcoin, This step does not just protect your potential profits but also can make increase your BTC amount. And 2 important thing you should hold tight

1. Never cutloss, This is the most important
2. Diversification

You should be patient because BTC pair need more patient than USD pair

[TinaK]

LoL, Nice story to elaborate your way of crypto protection in current environment. But trading platform we have rights to fix the auto trading in any investors, So we can fix some limits and it will exchange automatically in our wallet. My plan setting is it will reach 5% growth, I just exchange the 5% profit amout and again I monitor the market so we can see the both pump and dump in market. These are all really useful to increase the profit ratio.

[youdacapt]

Potential profits are a myth in crypto currency; it is either you take profit or you do not; and until you take profits in a trade or on a transaction; you cannot be a profit. The best way to protect your profits is to it and have it saved up in usdt; that way you can re invest your capital into another project or token.

[tabas]

You need to think whether you'll be a short term or long term guy. It's about your plan and strategy of selling and buying. But you need to remember those simple phrases that you will usually see from other holders that to buy when it's low and sell at high.
You don't sell at losses because if you do, then you shouldn't be investing if you're just for the losses. Like if you have $50k then it had gained $10k for which you bought at $50k and then the price suddenly goes up $60k. Luckily, you purchase @ $50k or below that then if you're too conservative, take your initial capital and just play around with your profits.

[StreakW]

Like your story, because no one knows the movement price of Bitcoin so I think people must stop being greedy, and if they already profit they must be grateful. For OP better to buy Bitcoin and keep hold it, but what happens if the price drops, just ignore it, your BTC amount is not decreased.

Be grateful and stop greedy

[notblox1]

If you worry about invested money than take out initial investment in fiat and hold only your profits.
You can multiply your holdings with leverage trading but it is very risky and people can get liquidated quickly if they don't know what they are doing.
If you are purchasing Bitcoin then think if you are doing it for long term or for trading, and if it is long term then don't bother so much with price changing up or down.
You can also earn interest from lending your BTC so you will earn more every day, and we could have some Defi solution for Bitcoin.

[Fundamentals Of]

I can hardly get your point actually.

Perceived loss is always there because we can never achieve that skill with which you will sell at that particular point where Bitcoin is at its highest price and buy at that particular point where Bitcoin is at its lowest in price.

No trader in real life who has mastered charting and all kinds of technical and fundamental analyses could avoid that perceived loss.

[Noctis Connor]

Wait what? It's always up to you whether you cash out or take another investment and if your having doubt with your investment remember risk is everything and it is part of your way , what ever happens always protect your profit and if you already multiply then save it for your future trading even those professional they can't even guess what will be the future in long term or short term it was you who experience that thing , bitcoin movement etc, if you want to learn more the thing is we can search it from internet.

[magneto]

You're essentially saying this: Can I possibly construct a position that would allow me to denominate my position in fiat when BTC goes down and in BTC when BTC goes up in value?

Let's rephrase that a little bit: you're essentially asking for free, risk free money.

Common sense tells us that this is impossible. You are either long BTC or short BTC, but not both simultaneously. So the short answer is no, it's not possible.

You can hedge your position, sure, but that would simply reduce your earning potential either way.

But I suggest you check out Binance's savings products - they have something *similar* but not exactly what you describe in terms of giving you the best of both worlds. Note that there is a significant counterparty risk involved since you don't hold your own privkeys though.

[pooya87]

You only lose what you wanted to have but won't lose what you might have had.
To clarify, there is no "perceived loss" in my opinion but only loss or gain. For example if you want to accumulate more fiat then if you bought bitcoin at $30k and then sold it at $40k and then price goes to $50k then you have not lost anything because you have your $40k which is now $10k above the initial $ amount you had.
Conversely if you want to accumulate more bitcoin and in the same scenario above you have actually lost a lot because if you buy back you won't get the 1 bitcoin that you initially had but only get 0.8 bitcoin.

When stablecoins were first introduced, I did not read about them nor understand them,

There really isn't anything special about stablecoins. They are centralized altcoins that promise you to have a stable price and to not vanish suddenly but at the same time they can very well disappear at any moment or have a price that is lower or higher than what they promised. They can also lock your account and take your stablecoins.

[hatshepsut93]

With that story out of the way, what methods exist, if they even exist, to reduce this perceived loss? Hedging?

Yes, there is a method, it's called trading perfectly - if you buy exactly at the bottom and sell exactly at the top, you won't have any perceived or real losses. But no one trades perfectly, so some perceived losses are inevitable. You can either try to improve at trading to reduce them, or just accept them as a part of the game.

Also, you can continuously sell during the bull market and then continuously buy during bear market - this way you will be guaranteed the average value of the cycle instead of relying on your trading skill. This is probably a good idea for those who are absolutely bad at trading.

[btc_angela]

I think you just make it complicated though, there's no such thing as perceived loss, perhaps you can term it as regrets. You sold early take profits, then the price goes up. Obviously, you 'regret' selling early because you could just hold it and wait for the top price to sell.

And I think there is no effective method here, you can only make profit again if the price dip and then that's the time you buy. You don't buy at the top.

[wxa7115]

I want to preface this post by saying that I have not studied economics, and these are just my blissful wishes.

For a while this little scenario has been playing in my head:


The same goes if we reverse the situation. If I sell 1 Bitcoin at $50k, yes I will have $50k, but if the price increases of Bitcoin to $60k I still have a perceived loss of $10k. The reason I say perceived is because you cannot lose something you never had, right? But some people like me don't experience situations like this as simply perceived loss, for me it's a real loss.
If I decide to buy back Bitcoin with $50k, while the price is $60k, I can only buy 0.83btc, all of a sudden I have a 0.1666 btc perceived loss.

I will have to disagree with this, you cannot have it both ways, you either care about your fiat profits or you care about your bitcoin profits, in the scenario that you are presenting you sold your coins at 50k and that's it, every single movement after that doesn't really concern you in terms of calculating your profits, how can you say that you have a 10k loss when you are holding no bitcoin?

That loss is only in your mind, the only thing that matters is what would you do once the price reaches 60k, will you buy or will you not? If you buy it then it is obvious that you're going to receive less bitcoin but that is not a loss because in the scenario that you are presenting you are caring more about your fiat profits, so as I have said you need to be decide what you care most about fiat or bitcoin? Once you know that you can design strategies to protect one or the other but not both.

[fadhilz123]

You should stop taking all benefits.. Bitcoin pumped you sell in peak, bitcoin dumped you buy in deep. Because no one can take all advantages of price fluctuation, so you need to be relieved. And I think if you always check the price for short term sometimes make you emotional or angry, so focus on the long term and you will be happy

[Quidat]

You wont loss nothing if you wont be selling even if you are already in negatives.Dont panic sell as if this one is the most common scenario on why people do ending up on a loss
and recovery would already be hard since price cant be predicted on when it would really be going up again.Protecting your profits is to actively get those even on realistic
percentage gains.Dont go nor set out high levels because it cant really swing up that high on a matter of day unless into those certain situations where it can swing up to 20% in a day
but those arent really that common swings. So its up to someone on what his goals or targets.Secure it out once you do see gains.

[KTChampions]

 
Great theme! How to always sell high and always buy low?
Interestingly, these arguments and questions are written seriously? Indeed, judging by the conclusion (I will endlessly increase my holdings), the author perfectly understands what the emergence of such a way to manage his money will lead to.

[STT]

You could try dollar cost averaging.     Lets say you are being totally sensible here, you gained 100k of BTC value and you have a house debt of 50k owing and you want the security of knowing no matter what your family is safe in a fully paid house.   A very reasonable expenditure increasing security.
    What you could do is use the 50k BTC to repay the housing debt and then rebuy the BTC over a planned term say 3 years or whatever idea you can come up with for a possible scenario to redirect future earnings.    Some will say why bother but good health is not always assured but bills will always need paying and puts the house at risk if you get sick say.      I noticed this guy is super bearish on BTC but appears to have a daily buy on BTC as he backs it long term perhaps, his native country destroyed their currency I think etc.    So his expectation is negative but even if BTC appreciates you also will realise a gain even buying the BTC back every day or week etc.  ; it just will be less then holding all but we dont know the future hence its viable imo.

[JimboToronto]

How would you protect your potential profits?

By leaving them in Bitcoin. Converting them to fiat is just plain stupid.

Of course you can spend a little on some personal toys. Some people like cars.

I prefer this nice little private lake on almost 400 acres (over 150 hectares) of pristine forest: