How to Take Profit part 1: Taking profit hurts

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Greed and fear stand between you in becoming a profitable investor. This Take-Profit series will help you understand: → Why it hurts to take profit → How to strategise your take-profit plan → How to hedge yourself against your psychological weak spots Here's part 1 🧵

To start off, I want you to understand this: 1️⃣ The reason you have a hard time taking profit is psychological. 2️⃣ Consequently, a take profit plan is a must have. 3️⃣ You need a system to hedge yourself against psychological weak spots while executing your take profit plan.

Part 1: Taking profit hurts. That’s because you have two "monkeys" screwing with your emotions. Learn how to kill these two monkeys and become a champion in taking profits. It's easier said than done but with the right attitude anyone can do it. Let's have a look.

You’ve probably aped into a project based on emotions. You’re convinced it’s a good play. Every one on Twitter agrees. Your investment is the next Ethereum killer. Every time you open your chart, price has gone up again and it has gone "only up" for two weeks already.

You’ve thought about taking profit quite often but you didn’t. I mean.. what if you take profit and price jumps again? That’d be stupid, so you don’t take profit and voila.. price jumps again. You have probably made the right decision.

You didn’t. You’ve made every single decision based on your emotions which are driven by two psychological phenomena: 1) Loss aversion 2) Confirmation bias. These are inherently human and make taking profit incredibly hard.

Beat loss aversion and confirmation bias and you’ll be a better investor. Unfortunately you can’t beat them if you’re unfamiliar with their workings. So let’s meet these two monkeys, that comfortably reside in your brain, and tell you not to take profit when you should.

Your brain is somewhat irrational. Loss aversion proves that claim. You brain is hardwired to fire a bunch of neurotransmitters into your soul that make you feel crap when you face a potential loss.

It’s the internal conflict you experience when you know you can take profit but don’t, because you’re afraid to miss the next pump. Although that might play out well it often leads to paper profits in bull markets but unrecoverable losses in bear markets.

That’s the loss aversion monkey. He tells you to put more weight on the extra bananas you potentially will miss in the future than the actual bananas you can have when you exit your position now. It’s a heuristic, battled tested by 1000s of years of evolution.

To screw you over more.. a second monkey at play misguides you into forming biased opinions about your bananas. He filters out information that challenges your reasoning and puts more weight on information that confirms your believes.

That’s the conformation bias monkey. He only likes tweets of fellow apes, confirming your bananas are still a good investment. When other apes raise questions about black spots and flies on your bananas, the confirmation bias monkey calls them fudders.

Many crypto investors can’t kill their these two monkeys and end up doing what humans do best: Interpreting all new information so that their prior conclusions remain in tact and paper profit their position into a loss. Silencing these monkeys is what you must learn.

In other words, what do you need to battle loss aversion and confirmation bias, so your profitability can rise and shine? To battle loss aversion and confirmation you need: → An exit plan for taking profit → A system to execute your plan Let's look at them both.

The exit plan. The first blow is half the battle. In other words, if you've aped into a position but failed to deliver your DYOR, you can't build a proper take profit strategy. These are the correct steps: 1️⃣ Gather information 2️⃣ Plan exit-strategy 3️⃣ Build a position

Your take profit strategy must have or factor in: → A timeframe of investment → Take profit targets → Price alerts → Token Unlocks → Roadmap events Therefor, properly DYOR is a no-brainer to strategise a take profit plan. Without it, inner apes take over.

However, your take-profit plan is a paper version of reality. Undoubtedly, emotions will interfere with your decision-making of actually taking profit when it comes to that point. That's why you need systems for execution, additionally to your exit plan for taking profit.

Just as creating a take-profit plan, creating systems requires to put thinking in why you need one. I'll help you answer that question. Systems for execution are great levers for growth and function as a hedge against the loss aversion and confirmation bias monkeys.

That's why you need one. Here's what variables I use for my "system": → Growth objectives → Strategies to hack my psychological weak spots → Tools & people I can use → Set of rules These variables are a mirror to taking-profit behaviour.

In the end, understanding your behaviour makes you a better investor and helps you grow as a person. Lessons learned from investing often apply in non-crypto related areas in your life too. That's why you should be in the crypto game. It's a fast track for growth.

Hopefully, after reading this thread, you understand the basics of how your brain sabotages taking profit. That's step 1. Next threads: Step 2: How to strategise your take-profit plan Step 3: How to hedge yourself against your psychological weak spot.

If you liked this thread, follow @zetoveraleenzet for more content about background information about hypes, trends and innovation in crypto. Liked reading about how to take profit? You also might like reading about how to manage a crypto portfolio. twitter.com/Zetoveraleenzet/status/1525073729373360128?s=20&t=0KA8Mytvj0s9SgZIo1aFjQ