Exit Strategy
By Menno — 13 years in crypto, 3 bear markets survived, zero paid promotions
Last updated: March 2026
An exit strategy is a predefined plan for when and how to sell your investments. It includes profit targets, stop losses, and rules for reducing positions — designed to remove emotion from selling decisions.
An exit strategy defines the conditions under which you will sell an investment. Without one, you're relying on gut feeling — which in crypto usually means selling too late (after a crash) or too early (before a major rally).
Components of a good exit strategy:
1. Profit targets: "I will sell 25% of my position when the price reaches 2x, another 25% at 3x, and hold 50% for the long term."
2. Stop losses: "If the price drops 30% below my cost basis, I will sell to protect capital."
3. Time-based rules: "I will reassess my position every quarter regardless of price."
4. Conditional triggers: "If the Fear & Greed Index reaches 90+ and Risk Wave is above 80, I will reduce exposure by 30%."
The most effective exit strategy is one that is written down before you invest, because once you're emotionally attached to gains or losses, rational decision-making becomes much harder.
Alpha Factory's DCA Planner includes an exit allocation feature that helps you set profit-taking zones in advance.
Related Tools on Alpha Factory
Related Terms
Dollar-Cost Averaging (DCA)
Dollar-cost averaging is an investment strategy where you invest a fixed amount at regular intervals regardless of price, reducing the impact of volatility on your overall purchase.
Risk Wave
Risk Wave is Alpha Factory's proprietary market risk indicator that measures cycle risk using volatility, trend analysis, and market structure to produce a 0-100 risk score.
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