Hold position after overbought or oversold market is reached

[Oshosondy]

If you use bollinger bands and relative strength index, or any other oscillatory indicator, you can easily know the overbought and oversold price of a coin.

I noticed one thing about me as a trader, that if I open a position and I gain a little, I close position when my analyses would have let me know that the price of the coin that I am using for the trading will get to the overbought or oversold market but which has not been reached.

Some traders like a day traders prefer not to scalp but leave position opened for awhile. When the market get to overbought market, their take profit will trigger and close the position.

But do you notice that you can close a position but the market will continue to increase and hit more overbought or oversold position as the price will continue to increase or decrease further. Are you a kind of trader that can wait for more profit after the overbought or oversold position has been reached already?

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea? I mean when you think the market can still continue in the position direction that you opened.

[laubeaud]

Based on my experience with RSI, the price can reach overbought zone and the price will continue rising. This tends to happen in bull run or strong uptrend.

The price can also reach oversold zone and continue falling.

Once the price hits Overbought zone, I starting locking profit with trailing stop.

[Hamza2424]

Hmm, OP in my view everyone utilizes his/her own psychology in order to book profits, some of them use their analysis targets, some of them use profit averaging, and some kind of their own strategy based on their experience.

I used some kind of similar strategy months back, where my intention was to book 20% of the total trade on my first target and then leave the rest trade on the 0-loss, stop-loss, in order to maximize profitability in an uncertain situation like you are talking about to go for a big hunt haha.

[kentrolla]

Looks sensible to me as long as we don't experiment with more than 10-15% of our holdings but I don't think this can be enforced to regular traders because there isn't one particular indicators or strategy which is followed as most of us use multiple indicators and have our own strategy. But, it's a good idea to risk 10-15% because within few trades we will get to know if it really works or don't.

[Rruchi man]

If you use bollinger bands and relative strength index, or any other oscillatory indicator, you can easily know the overbought and oversold price of a coin.

I make use of Fibonacci the more, and for that you could also see the premium zones and the discount zones to sell and to buy respectively.

I noticed one thing about me as a trader, that if I open a position and I gain a little, I close position when my analyses would have let me know that the price of the coin that I am using for the trading will get to the overbought or oversold market but which has not been reached.

What do you do after you take profit? do you take profit and leave the market, or you take profit and then keep observing the market to see it's behaviour.

If you have taken profit early often times and stay to observe the behavior of the market after, you will in time develop the confidence to stay longer in the market.

[logfiles]

That scenario happens to me as well. You close the position and the market continues to trend for some time. Honestly it hurts especially when you have taken "little" profit but i try to stick to my strategy. It could have been worse 

I have seen some traders take partial profits as well, though I have never done it myself, but I think it's also a good strategy if you are unsure about how high the coin price can go.

[adaseb]

BB or RSI generally only work well with stocks. It doesn't work well for crypto, especially non-bitcoin markets because they can get over-extended for a long time. In hindsight it looks like its easy but if you backtest these indicators you will see that many times you would of got in way too early.

Because price will touch these indicators but it will keep going in that direction for many many weeks. I think they would work well in a ranging environment but never in a strong bull or bear market. Same with all the other technical indicators out there, besides horizontal support and resistance, the rest don't really work well. Moving averages doesn't work well and neither does Fib levels.

[Catenaccio]

If you use bollinger bands and relative strength index, or any other oscillatory indicator, you can easily know the overbought and oversold price of a coin.

I noticed one thing about me as a trader, that if I open a position and I gain a little, I close position when my analyses would have let me know that the price of the coin that I am using for the trading will get to the overbought or oversold market but which has not been reached.

It is good and safe trading strategy if you only trade spot and don't use this strategy to short when indicators show overbought. Price can continue to move up more and move to a lot higher price, so if you apply oscillatory indicators to find entry for your short, you can be liquidated.

Price can go up after enter the overbought area because of FOMO and Short squeeze so don't short because you simply see overbought signals. Price of cryptocurrency move up or down not only by supply and demand principle but by liquidations too and you never can estimate power of liquidation on price.

[Sebas.tian]

I think, something like this happened early this year that made many traders to rush to the market to sold all their Bitcoin when the price reached $60,000 hoping the price will not increase above that price, but those that continue holding their Bitcoin sold at $73,000 to make a passive income, because they exercise patience to see the highest price of the market. One thing I came to discovered among potential traders in the community, they know how to endure when the price start increasing especially when the bullish season appear in the market, because they know that it will increase higher to allow traders to achieve what they have never achieved before in the crypto market. I don't think, I will continue rushing to the market to trade my coins again, because I use to regret whenever I see the price continue increasing after I have sold all my coins in the market.

[shinratensei_]

can never hit the highest price point with trading, the price can continue to go up despite being overbought, we can always hold some but it also exposes to lost, meaning the risk of losing money and the chance of making more money also increase equally on both side so it can be counter productive as well.
as someone that invests heavily myself sometime just ignore BB and RSI, these oversold and overbought sometime just doesn't really mean something to me except the fact that maybe it IS over sold and over bought but at the end of the days the market is so abstract that there are many scenarios where things just gonna go the opposite.

personally I always set target, but your strategy of holding certain portion of the coin just in case is also good idea if we really sure that the market can go climb higher but we just don't really want to miss that opportunity of profit because of greed in which such strategy probably already being practiced by many people.

you know some people out there in their trading everytime they got profit they just took out their initial investment and let the remaining coin as a profit get as high as it can so they risked nothing but got the leverage.

[Synchronice]

If you buy a coin and wait for price to go up, then why should you open long position? Isn't it better to do spot trading instead of futures? I use futures when I want to open a short position, i.e. profit from price going down.

I am not a professional trader but I learnt from my experience that risk is risk and you really gamble 50/50. It's very individual whether you should hold position after overbought or not because if the coin is overbought but there is an upcoming news that will happen more likely and positively affect Bitcoin's price, then it's worth to keep open position. For example, Bitcoin was overbought before Bitcoin ETF approval but it was definitely worth it to hold open position. There are moments when you don't know what's gonna happen and you have to either afford the risk or not, that's why every case is individual.

[SamReomo]

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea?

That's a good idea only when you have huge capital because with small amount you can't take such risks because market can go down even after proper analysis and that happens many times.

If someone who trades with $10k to $50k then that person could literally take his/her initial money with just 1%-2% increase in value of the position and leave those 1%-2% for more growth.

By doing that he/she get sure that in the process he/she won't lose anything and if the value of the position goes further up then he/she may earn more profits but if it goes down then he/she will still make some profit.

[Peanutswar]

Are you doing spot or futures trading? In spots you don't need to worry too much because you are seeing with the long term goal which is the next all time high but if you are having a quick flip seems ideal is to make a limit order every time you make position like a casual trader for higher time frames but in futures making a position longer than a day I'm not sure if consumes additional cost too.If you have an active trader you can ride with the market for a lower time frames. I do use MACD and Bollinger bands for indicator of oversold and overbought.

[muncuss]

Because price will touch these indicators but it will keep going in that direction for many many weeks. I think they would work well in a ranging environment but never in a strong bull or bear market. Same with all the other technical indicators out there, besides horizontal support and resistance, the rest don't really work well. Moving averages doesn't work well and neither does Fib levels.

yes like other said crypto can stay in overbought/sold for long time, but for MA i think it is good or at least as good as it is

[GreatArkansas]

(...)
But do you notice that you can close a position but the market will continue to increase and hit more overbought or oversold position as the price will continue to increase or decrease further. Are you a kind of trader that can wait for more profit after the overbought or oversold position has been reached already?

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea? I mean when you think the market can still continue in the position direction that you opened.

This really depends on the trader. There are some traders who are just sticking with their plan, profit is already profit, no more hoping and close trade and forgetting, prepare for the next trade.
There's nothing bad about taking partial profits - at least you already securing profit but not totally. Still we don't know what will happen next, like if it will go favor to your or the opposite.

[slaman29]

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea? I mean when you think the market can still continue in the position direction that you opened.

This really depends on the trader. There are some traders who are just sticking with their plan, profit is already profit, no more hoping and close trade and forgetting, prepare for the next trade.
There's nothing bad about taking partial profits - at least you already securing profit but not totally. Still we don't know what will happen next, like if it will go favor to your or the opposite.

Ya I'm against the idea of changing your decision. I can definitely understand to make trailing stops, that's fine, but I believe in discipline of closing when you reach exit hence I always use stop, no matter buy or sell.

If you are tempted to let things ride on profit, you will be tempted to let losses ride. Then it's a neverending position, it blocks you from opening new positions, and you didn't manage to test your TA properly. Trading is discipline and training, most people forget

[Oshosondy]

BB or RSI generally only work well with stocks. It doesn't work well for crypto, especially non-bitcoin markets because they can get over-extended for a long time. In hindsight it looks like its easy but if you backtest these indicators you will see that many times you would of got in way too early.

RSI and BB and other indicators are working with bitcoin. Also the indicators are working with most other cryptocurrencies aside few which can be shit coins and newly launched projects. The problem some traders face with the altcoins is that they may be too volatile. Some are very volatile and trader will use higher amount of money that they do not intend to use to trade with its volatility but they would have entered the position before knowing they do not make the correct calculation for the right amount of money that they should use to enter the position.

[naira]

But do you notice that you can close a position but the market will continue to increase and hit more overbought or oversold position as the price will continue to increase or decrease further. Are you a kind of trader that can wait for more profit after the overbought or oversold position has been reached already?

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea? I mean when you think the market can still continue in the position direction that you opened.

At least securing 75% for Take Profit is quite good and the rest is just a guess because when we reach the ideal profit point most of us end the trade and don't dare take the risk of leaving it open. The method that can be said to take off is either continuing to increase or vice versa. However, as long as you have secured the occasional profit percentage, there is no harm in leaving the position open to prove whether our instincts are right or not. Because leaving a position open is the same as not implementing any strategy.

NB: I'll give it a try once in a while if it can provide something a little different. Because all this time, when I took profit, I never thought about leaving a few percent.

[doomloop]

At least securing 75% for Take Profit is quite good and the rest is just a guess because when we reach the ideal profit point most of us end the trade and don't dare take the risk of leaving it open. The method that can be said to take off is either continuing to increase or vice versa. However, as long as you have secured the occasional profit percentage, there is no harm in leaving the position open to prove whether our instincts are right or not. Because leaving a position open is the same as not implementing any strategy.

I think 75 percent is too high already for you to say "At Least", though there might be people whose standard is high, so I guess I will just let them. The rest must not be a guess because we also have another higher target.

The market is only unpredictable, so there is still a chance that we may fail on achieving them. Ideal profit says it all, so obviously we will mostly sell at this point and being greedy is not a good thing because the more we want more, the more we will also/only lose more. Usually, a trader can mostly leave their trades open if they are still down. It's because they are waiting and hoping that the price or them can still recover.

[Zaguru12]

But do you notice that you can close a position but the market will continue to increase and hit more overbought or oversold position as the price will continue to increase or decrease further. Are you a kind of trader that can wait for more profit after the overbought or oversold position has been reached already?

I am thinking recently that why not hold like 10 to 25% of your trading fund to leave the position opened and close just 75 to 90%. Good idea? I mean when you think the market can still continue in the position direction that you opened.

This is something that happens most often, most especially if there is a strong fundamental analysis that’s driving the market trend. This fundamental can create more demand or supply even at the point where the market is been overbought or oversold. One thing about been a great trader is actually following your own trading pattern and not getting greedy to either take profit at your intended place or set stop loss.

In situations like this when there is still demand or supply at the places that supposed to be a resistance or support level, i take partial of 75% and break even to at the position where it is supposed to be my TP. I usually get my indication that an overbought or oversold area will either be used as resistance or support level by using the volume chart at that area or looking at the types of candle that closes there