Develop a Strategic Exit Strategy

Every good plan must include an exit strategy. Science tells us that whenever our trades are winning, dopamine is released from our brain, making us feel good about our decisions.

Absent an exit plan, that good feeling will cause us to stick with the position as a feedback loop kicks off. More gains lead to more dopamine, and more dopamine causes us to hold on to the trade. Then, if the market collapses, we hope it will bounce back. In a best-case scenario, the crypto market rallies again. But there’s also a worst-case scenario: the correction keeps going further and further.

Every great trend eventually ends. Sure, strong trends can last a lot longer than people anticipate. But eventually, the trend becomes oversaturated, and it changes.

A good trader is going to think about their exit plan BEFORE they enter a trade. This way, it is clear at what price they’ll close out the trade for a profit, and at what price they’ll close out for a loss. Again: stick to your plan.