Hold position after overbought or oversold market is reached

[nelson4lov]

The strategy in OP is one of the strategies I've used in the past where you take out some initial profits and leave the rest to ride. While  it's a decent strategy that allows you to pocket some initial profits, it is still dependent on the market which means that if the trade reverses and ends in SL, you only get some tiny profit to offset the losses. That's why no one strategy is the best. You just have to keep experimenting and tinkering till you find what works best for you.

[Assface16678]

The strategy in OP is one of the strategies I've used in the past where you take out some initial profits and leave the rest to ride. While  it's a decent strategy that allows you to pocket some initial profits, it is still dependent on the market which means that if the trade reverses and ends in SL, you only get some tiny profit to offset the losses. That's why no one strategy is the best. You just have to keep experimenting and tinkering till you find what works best for you.

Well, still, it's a great strategy. I also use this strategy, and I think most of us have already done it. It's better to secure some profit than to let it all out, because if you are monitoring your trade, then it would be good because you can know when you can exit some of your profits in perfect timing. That is why it is better to keep monitoring your trade in order to know the possibilities.
 
Well, it is true that experimenting with other methods of trading should be normalised because in that way you could see the most suitable trading way you could do, but of course try it out on a demo account first because experimenting in a live account could become too costly, and whose trader wants to lose funds just because of experimenting with other ways to trade right? So its either you try it on demo account first then execute it in live account if you see it fits.

[Pandu Geddon]

Well, still, it's a great strategy. I also use this strategy, and I think most of us have already done it. It's better to secure some profit than to let it all out, because if you are monitoring your trade, then it would be good because you can know when you can exit some of your profits in perfect timing. That is why it is better to keep monitoring your trade in order to know the possibilities.
 
Well, it is true that experimenting with other methods of trading should be normalised because in that way you could see the most suitable trading way you could do, but of course try it out on a demo account first because experimenting in a live account could become too costly, and whose trader wants to lose funds just because of experimenting with other ways to trade right? So its either you try it on demo account first then execute it in live account if you see it fits.

Some cases of trading that do not use a stop loss are missing the right moment to exit. so you can't avoid losses. and some traders will choose to hold their assets and change strategies for a longer period of time until returning capital or making small profits to reduce the risk of larger losses. but some also cut quickly and accept small losses rather than lose it all.

Most novice traders who still panic easily always monitor their trades. but the impact can also be quite bad because the changing situation that occurs in the market can make them panic and not carry out according to the plans that have been made.

[BlackBoss_]

Some cases of trading that do not use a stop loss are missing the right moment to exit. so you can't avoid losses. and some traders will choose to hold their assets and change strategies for a longer period of time until returning capital or making small profits to reduce the risk of larger losses. but some also cut quickly and accept small losses rather than lose it all

When traders are in trading, two trading order types they must learn and apply are: Stop loss order, and Stop limit order.

Without these orders, traders will not be able to cut loss, without effect of emotion and psychology that only makes them hesitate to cut loss and exit the market in worst time.

Stop loss vs. Stop limit order, what's difference?
What is a Stop limit order?

[el kaka22]

I feel like overbought and oversold does not happen that much in the crypto world, because it is not like the traditional market. You may think that it is overbought for a moment, and then next day you see it bought even more and went up, or vice versa when you think it is oversold and can't go down much more, and see it crash the very next day.

I understand the logic and this does happen in the other markets but that is not really that common for the crypto world, or at least it is not like expected. I believe that we should just consider the situation we are in right now, and just expect it to be a little different. If we can make that work, then we are going to probably keep on making bigger profit with time without a doubt.

[dunfida]

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 where trailing taking profit would really be that significant but basing up on what you have mentioned on here then taking up that 75% of profits and leaving 25% wont really be  that a bad idea but in my case
then i would really be closing it out completely on which PROFIT IS PROFIT as always. Dont tend to look back if ever the market would really be that going further in terms of its movement.
When it comes to probability of having that even further overbought or sold condition then we do know that the market isnt something that could be predicted no matter how good your technical
indicator combinations would be showing up but still it wont really be giving out that 100% precision about price movement. It could neither be having that bounce back or would really be continue dropping
just because there are some additional fundamentals that mixed up in the market?

This is why decision making on this kind of conditions would really be crucial but just like on what said earlier that take and ensure profits so that you wont really be ending up
on regretting.

[bitcoin_mining]

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.

But if we don't have a definite plan in advance, it is difficult to hold the investment for a certain period of time. For example if my plan is that bitcoin is now worth 60k dollars and I invest right now and keep recruiting consistently but when bitcoin price hits 100k dollars I will sell my investment. It is one thing if the investor thinks that he will hold his investment for four years and no matter how much the market changes during these four years he will stick to his decision but he will be able to implement his plan. Now which strategy you adopt in investing is entirely up to you but whatever strategy you adopt try to implement that strategy completely.

[Peanutswar]

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.

But if we don't have a definite plan in advance, it is difficult to hold the investment for a certain period of time. For example if my plan is that bitcoin is now worth 60k dollars and I invest right now and keep recruiting consistently but when bitcoin price hits 100k dollars I will sell my investment. It is one thing if the investor thinks that he will hold his investment for four years and no matter how much the market changes during these four years he will stick to his decision but he will be able to implement his plan. Now which strategy you adopt in investing is entirely up to you but whatever strategy you adopt try to implement that strategy completely.

if you will check the current market state the price of the Bitcoin. are now holding with the 57k and people now trying to test if this will become the support for the next pump or another dump if it breaks the another resistance people now will get confuse if this is the bottom of the price now if you are aware with the market and you will considered this as an opportunity and you will have a goal for a long term holding. Now it's up to you if you will get a ride with the dump or wait at the end we are talking about profit here.

[Wind_FURY]

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.

Do two back-tests using the same amount of capital.

First Test - Simply buy ahd HODL from a chosen starting date to a chosen ending date, probably two years.

Second Test - Use your overbought and oversold strategy using the same starting and ending dates.

Compare the profitability of both. If simply HODLing is more profitable, then why risk yourself of going mentally insane through the stress of "trading".

[justdimin]

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.

I am sure that this is not new. There are practices like profit booking with 50% of position at target level-1 and waiting for target-2 with remaining positions. If your risk appetite is low then you can wait for further profits with your 10 to 25% of positions. Securing profits is always a must one. Trailing stoploss or booking profits for 50% (or higher %) of positions are few strategy we do follow for the sake of securing profits. I agree it is a good idea and emphasize every trader to practice these.

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.

No indicator is accurate which is the reason we have multiple targets. If your tools notify you about reaching overbought or oversold region, then it is always recommended to take off some positions to ensure that we are not going to lose all the profits in the case of any reversal and it the same time that we are not going to miss out further movement of market as well.