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Chapter 3 · Advanced/TipsLesson 9 of 12
3.9

When to Take Profit & Cut Loss: Set Your Rules Before Entry

± 5 min read 5 sections

Lesson 3.3 covered the basics of (TP), , and why matters more than . This lesson focuses on putting it into practice: setting your exit rules before , taking profit in stages, and cutting losses without getting emotional. For money management and an RR calculation example, go back to lesson 3.3.

Section 1 / 5

Set Your Rules Before Entry

Before you click Buy, answer these 4 questions and write them in your journal (lesson 3.4):

  1. Why are you getting in? For example: the lesson 2.14 checklist came out low risk and the price is close to (lesson 3.6).
  2. When does that reason no longer hold? For example: support breaks, the starts selling, or big exit.
  3. How much are you ready to lose? Your cut loss level as a percentage or .
  4. Where do you take profit? Your TP targets, and how much you sell at each one.

If you're still unsure about any of the answers, hold off on the entry.
Example plan (illustration, made-up numbers, not advice):

  • Entry at 20K MC, near support.
  • Cut loss: MC drops to 15K (about −25%) and doesn't come back.
  • TP 1: 40K MC (2x), sell 50%. Roughly your initial money is back (fees not counted yet).
  • TP 2: 80K MC, sell half of what's left.
  • Let the rest run, and get out if there's a danger sign (the dev, , or big holders start dumping).

In this example, you're ready to lose 25% for a first target of +100%, so the RR is 1:4 (how to write RR is in lesson 3.3).

Section 2 / 5

Taking Profit in Stages

  • Selling in stages = selling part at several points on the way up, not all at once (lesson 3.3).
  • The upside: you don't need to guess the top. If the price keeps going up, you still have some left. If it turns back down, part of your profit is already locked in.
  • Take out your initial money () first. Once your money is back, the rest becomes a "free ride", so the mental pressure is much lighter.
  • Use the automatic Take Profit feature in your terminal so you don't depend on emotion (lesson 3.3). On Frontrun, the Sell 10% / 25% / 50% / 100% buttons can also be used to sell in stages (lesson 1.5).
  • Profit isn't money until it's sold and withdrawn. Withdraw part of it regularly (lesson 1.6).
Section 3 / 5

Cutting Losses Without Getting Emotional

  • A cut loss is part of the plan, not a sign that you failed. A small cut loss = the cost of learning (lesson 3.3).
  • There are three triggers (lesson 3.3): your reason for entry no longer holds, the price hits the loss limit you set before buying, or there are signs of a /scam.
  • Once your limit is hit, execute. Don't move your cut loss level lower because "it'll come back". This pattern is what often turns people into .
  • Don't average down on a token whose reason for entry no longer holds (lessons 2.12, 3.6).
  • If your tools have a Stop Loss feature (DryFlip has one, for example, lesson 1.2), set it from the start so decisions don't get made in a panic.
  • After a cut loss, take a break first. Rushing into an entry to win your money back is called a (lesson 3.12).
Section 4 / 5

When Can You Change the Plan?

  • You can, when there's new info from the same checks, for example the dev does a Sell All or a big starts selling. That usually means getting out sooner.
  • Be careful if the reason is only a feeling. Moving your TP target again and again because of greed, or lowering your cut loss level because you can't let go, are dangerous habits (lesson 3.3).
  • Log every change to your plan in your journal, then look at it again in your weekly review (lesson 3.4).
Summary

Summary

Summary
  • Before entry, write down your reason for getting in, the conditions that cancel that reason, your cut loss level, and your TP targets.
  • Taking profit in stages: take out your initials first, sell part at several targets, and let the rest run with a clear limit.
  • Cut loss as soon as your limit is hit, no bargaining. The details of money management and RR are in lesson 3.3.
Section 5 / 5

Common mistakes

  • Getting in first, thinking about the exit later.
  • Moving your cut loss level lower because "it'll come back".
  • Waiting for the top to sell everything, then the price turns back down and the profit is gone.

Your exit plan is your brake. In the market, what we're after is the smallest possible risk, so don't let greed or emotion decide when you get out.
Next up, lesson 3.10: : What Percent of Your Money per Trade?
Not financial advice.

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