Whether it's futures or spot - profit taking is a must. If with futures everything is clear (take profits or you'll be left with nothing), then what about spot, since I’m an investor in the future? Let's break it down with an example for the very beginners.
Suppose two people bought $BNB for a total of 100$ at a price of 550$.
The first didn't worry and just put it into Earn, for a few cents. The token sits, the cents drip, and in case of a rise, there will be profit. Overall, a long-term hold.
The second decided to refuse rewards and chose to take profits and buy back on dips.
After waiting for the price to reach 700, he sold half and made ~25% profit (let's ignore fees for simplicity). Then the price went down, and he sold the rest at 600, making a conditional 10%. On average, he raised around 17%. Next, he waited for a price pullback and bought again at 550 but already at 117$. Then he waits and sells everything at 600, making an average profit of 10%. Now he has around 130$. Again, a drop on the horizon as the price fell to 500. He buys again. After that, the price rises, and he secures his position around 600, which is 20%, adding another 26$.
So, what are the results? The price is still 550. The first has the same 100$ in BNB, and literally a couple of cents from savings.
The second has 156$ in USDT. And if necessary, he is ready to buy at the same 550$, but already with 156$.
The time frame is the same, and the price remained unchanged. But one has a profit of 50% from the deposit, while the other is a 'long-term investor' waiting for better times. That's why it's essential to know how to take profits. A clumsy, primitive example, maximally exaggerated! Yet, at the same time, it vividly shows why profit taking is necessary.
