Investment Strategies: Entry and Exit Strategies
The Story of the Smart Shopper 🛒
Imagine you want to buy your favorite toy. Would you run into the store and grab the first one you see at any price? Or would you wait for a sale, buy a little at a time, and then sell your extra toys when everyone wants them?
Cryptocurrency investing works the same way! Knowing when to buy and when to sell is like being a smart shopper at the world’s biggest marketplace.
🚪 Entry Strategies: Getting Into the Game
Entry strategies are how and when you decide to buy cryptocurrency. Think of it like deciding when to jump into a swimming pool!
What is an Entry Strategy?
An entry strategy is your plan for buying. Instead of buying randomly, you pick the best moment—like waiting for the perfect wave before surfing.
Simple Example:
- Bad approach: “I’ll buy Bitcoin right now because my friend said so!”
- Good approach: “I’ll buy Bitcoin when the price drops below $30,000”
Types of Entry Strategies
1. Market Order Entry
Buy immediately at the current price.
Like: Walking into a store and paying whatever price is on the tag.
When to use: When you believe the price will go up fast and you don’t want to miss out.
2. Limit Order Entry
Set a specific price you’re willing to pay and wait.
Like: Telling the store, “I’ll buy this toy only if it goes on sale for $10.”
Example:
- Bitcoin is at $35,000
- You set a limit order at $32,000
- Your order only happens if the price drops to $32,000
3. Breakout Entry
Buy when the price breaks through an important level.
Like: Waiting for the roller coaster to start going up the big hill before you get excited.
Example:
- Bitcoin has been stuck between $30,000-$35,000 for weeks
- When it breaks above $35,000, you buy
- This suggests a new upward trend is starting
graph TD A["Want to Buy Crypto"] --> B{What's Your Style?} B --> C["Patient? Use Limit Orders"] B --> D["In a Hurry? Use Market Orders"] B --> E["Watching Trends? Use Breakout Entry"] C --> F["Wait for Your Price"] D --> G["Buy Now!"] E --> H["Watch Key Levels"]
📦 Accumulation Strategies: Building Your Treasure Chest
Accumulation is about steadily building up your cryptocurrency over time. Think of it like collecting coins in a piggy bank!
What is Accumulation?
Instead of buying everything at once, you buy small amounts regularly. This way, you don’t have to guess the “perfect” time to buy.
Popular Accumulation Strategies
1. Dollar-Cost Averaging (DCA)
Buy the same dollar amount at regular times—no matter what the price is.
Like: Putting $5 into your piggy bank every week, whether you found a dollar on the ground or not.
Example:
- You invest $100 every Monday
- Week 1: Bitcoin at $40,000 → You get 0.0025 BTC
- Week 2: Bitcoin at $35,000 → You get 0.00286 BTC
- Week 3: Bitcoin at $45,000 → You get 0.00222 BTC
- Result: You bought at an average price, not the highest!
2. Value Averaging
Adjust your purchase amount to reach a target value.
Like: If your piggy bank is supposed to grow by $10 each week, you add more when it’s light and less when it’s heavy.
Example:
- Target: Portfolio grows by $100/month
- Month 1: Portfolio is worth $80 → Buy $120 worth
- Month 2: Portfolio is worth $220 → Buy only $80 worth
3. Dip Buying
Wait for prices to drop significantly, then buy more.
Like: Waiting for your favorite candy to go on clearance sale.
Example:
- Bitcoin drops 20% in one day
- You use your savings to buy extra
- When the price recovers, you have more Bitcoin!
graph TD A["Accumulation Strategies"] --> B["DCA: Same Amount Regularly"] A --> C["Value Averaging: Adjust to Hit Targets"] A --> D["Dip Buying: Buy When Prices Fall"] B --> E["Simple & Automatic"] C --> F["More Control & Math"] D --> G["Requires Watching Markets"]
🚀 Exit Strategies: Knowing When to Leave the Party
Exit strategies tell you when and how to sell. Even the best investment is worthless if you never take profits!
What is an Exit Strategy?
It’s your plan for selling before you ever buy. Smart investors decide their exit before they enter.
Like: Before going to an amusement park, you decide: “I’ll leave by 8 PM no matter how much fun I’m having.”
Types of Exit Strategies
1. Target Price Exit
Decide on a specific price to sell at.
Example:
- You buy Bitcoin at $30,000
- You set a target: “I’ll sell at $50,000”
- When Bitcoin hits $50,000, you sell and celebrate!
2. Percentage Gain Exit
Sell after your investment grows by a certain percentage.
Like: “I’ll sell when my $100 becomes $200” (100% gain).
Example:
- You want a 50% profit
- Buy at $1,000
- Sell when it reaches $1,500
3. Stop-Loss Exit
Automatically sell if the price drops too much to protect yourself.
Like: Having a safety net at the circus.
Example:
- You buy at $40,000
- You set a stop-loss at $36,000 (10% below)
- If it drops to $36,000, it automatically sells
- You lose 10% instead of potentially 50%!
4. Trailing Stop Exit
A stop-loss that moves up as the price rises.
Like: A loyal dog that follows you but stays 5 steps behind.
Example:
- Buy at $40,000 with a 10% trailing stop
- Price rises to $50,000 → Stop moves to $45,000
- Price rises to $60,000 → Stop moves to $54,000
- Price falls to $54,000 → Automatically sells
- You kept most of your gains!
graph TD A["Exit Strategies"] --> B["Target Price: Sell at Specific Price"] A --> C["% Gain: Sell After X% Profit"] A --> D["Stop-Loss: Limit Your Losses"] A --> E["Trailing Stop: Lock In Gains"] B --> F["Example: Sell at $50K"] C --> G["Example: Sell at +50%"] D --> H["Example: Sell if -10%"] E --> I["Example: Stop follows price up"]
🎁 Distribution Strategies: Sharing Your Treasure Wisely
Distribution is about how you sell—not all at once, but in pieces. It’s the opposite of accumulation!
What is Distribution?
Instead of selling everything at the same moment, you sell gradually. This protects you from selling everything at a bad time.
Like: Instead of eating all your Halloween candy on November 1st, you spread it out over weeks!
Types of Distribution Strategies
1. Scaling Out
Sell portions at different price levels.
Example:
- You own 1 Bitcoin bought at $30,000
- Sell 0.25 BTC at $40,000 (take some profit)
- Sell 0.25 BTC at $50,000 (take more profit)
- Sell 0.25 BTC at $60,000 (almost done!)
- Sell 0.25 BTC at $70,000 (final piece!)
Result: You captured gains at multiple levels instead of guessing the top.
2. Time-Based Distribution
Sell fixed amounts at regular intervals.
Like: Selling one toy from your collection every month.
Example:
- Sell 10% of your holdings on the 1st of each month
- After 10 months, you’re fully out
- You got different prices along the way
3. Portfolio Rebalancing
Sell to maintain your ideal mix of investments.
Like: If you want half chocolate and half vanilla ice cream, and the chocolate keeps growing, you eat some chocolate to keep balance.
Example:
- Your target: 50% crypto, 50% stocks
- Crypto grows to become 70% of your portfolio
- You sell 20% of the crypto to buy stocks
- Now you’re back to 50/50!
4. Event-Based Distribution
Sell when specific events happen in your life or the market.
Example:
- “I’ll sell half when Bitcoin hits a new all-time high”
- “I’ll sell 25% when I need money for college”
- “I’ll sell if my investment doubles”
graph TD A["Distribution Strategies"] --> B["Scaling Out: Sell in Pieces at Different Prices"] A --> C["Time-Based: Sell Regularly Over Time"] A --> D["Rebalancing: Maintain Your Target Mix"] A --> E["Event-Based: Sell When Things Happen"] B --> F["Capture Multiple Price Points"] C --> G["Remove Emotion from Selling"] D --> H["Keep Portfolio Balanced"] E --> I["Respond to Life & Markets"]
🧠 Putting It All Together
Think of crypto investing like a road trip:
| Strategy | Road Trip Analogy |
|---|---|
| Entry | Deciding when to leave home |
| Accumulation | Packing snacks gradually before the trip |
| Exit | Knowing your destination and when to stop |
| Distribution | Unpacking your bags bit by bit when you arrive |
The Golden Rules
- Always have a plan before you buy
- Never invest more than you can afford to lose
- Emotions are your enemy—stick to your strategy!
- Spread it out—both buying AND selling
- Write it down—your future self will thank you
🎯 Real-World Example: Sarah’s Strategy
Sarah wants to invest $1,200 in Bitcoin over a year.
Her Entry Strategy:
- DCA: $100 every month (no matter the price)
Her Accumulation Plan:
- Buy extra $50 if Bitcoin drops 15% or more in a week (dip buying)
Her Exit Strategy:
- Target: Sell 25% when she’s made 100% profit
- Stop-loss: Sell everything if down 30% from her average purchase price
Her Distribution Plan:
- When Bitcoin hits new highs, sell 10% each time
- Rebalance quarterly to keep crypto at 30% of her total investments
Result: Sarah doesn’t panic. She doesn’t get greedy. She has a PLAN!
🌟 Key Takeaways
| Concept | What It Means | Remember |
|---|---|---|
| Entry | When/how you buy | Have rules, not feelings |
| Accumulation | Building up slowly | DCA is your friend |
| Exit | When/how you sell | Decide BEFORE you buy |
| Distribution | Selling in pieces | Never all at once |
You’re now smarter than 90% of crypto investors who buy based on tweets and sell based on fear!
Remember: The best strategy is the one you’ll actually follow. Keep it simple, write it down, and stick to it. 🚀