Handling Wins

11.1 The dangerous month

Node had a fantastic month: eight winning trades out of ten, and the account was up 25%. Node felt sharp, confident, and in tune with the market.

The next month, Node doubled position sizes, loosened stops "because I'm reading it well," and took trades outside the usual setups. By the end of the month, all of the previous month's gains were gone, and more.

"Losses never hurt me as much as that winning streak did," said Node.

"Winning streaks are often more dangerous than losing streaks," said Hash. "Losses make you careful. Wins make you careless."

11.2 Why wins are risky

Effect of winning	How it leads to mistakes
Overconfidence	You attribute success to skill, even when luck played a role (Chapter 8)
Larger sizing	Bigger positions just before the inevitable losses
Loosened rules	Skipping checklists and stops
Feeling invincible	Taking setups you'd normally reject
Lifestyle changes	Spending as if gains are permanent

A short run of wins doesn't prove skill. Even a coin flip produces streaks. With a 50% win rate, eight wins out of ten happens by chance about 5% of the time, so over many months of trading, most traders will see such a run eventually.

11.3 Luck versus skill

Signs a result may be mostly luck	Signs a result may reflect skill
Small number of trades	Many trades over different market conditions
One big win dominates	Consistent results across many trades
Rules weren't followed	Rules were followed consistently
A strong bull market lifted everything	Outperformed a simple benchmark like holding BTC (Module 11, Chapter 12)

"So if everything went up and I made money, that might not be skill at all," said Node.

"In a bull market, almost everyone looks like a genius," said Hash. "The question is whether you beat just holding Bitcoin, and whether you'd have survived a crash with your sizing."

11.4 Taking profits

In crypto, unrealised gains can disappear quickly. Many people watched portfolios grow enormously during bull markets, then fall 80% or more, without ever taking profits.

Profit-taking approaches:

Approach	How it works
Scaling out	Sell portions at predefined targets (Chapter 4)
Rebalancing	Sell back to target allocations after rallies (Chapter 5)
Recover initial investment	After a large gain, withdraw the original amount, leaving only profit at risk
Cycle-based	Take more profit as cycle indicators reach historically overheated levels (Module 6, Chapter 6)
Time-based	Sell a fixed amount regularly during strong markets

Example: recovering the initial investment.

	Value
Original investment	$5,000
Current value after a rally	$20,000
Withdraw	$5,000
Remaining at risk	$15,000, all profit

"So even if the rest goes to zero, I didn't lose my own money," said Mint.

"And psychologically, it becomes much easier to hold the rest calmly," said Hash.

Remember that taking profits may be a taxable event (Module 14, Chapter 2).

11.5 Where profits go

Profits that stay on an exchange or in volatile assets can still be lost. Consider moving some profits:

1. Into stablecoins or tokenised government bonds, as dry powder for future opportunities.
2. Into self-custody, if you'll hold crypto longer term (Module 2).
3. Out of crypto entirely, into savings or other investments that fit your goals.
4. Toward real-world needs, like paying down debt or building an emergency fund.

11.6 Rules for after winning

Hash suggested specific rules for good periods:

1. Don't increase risk per trade after a winning streak. Increase size only through account growth, at the same percentage risk (Chapter 3).
2. Keep using the checklist, especially when you feel you don't need it.
3. Review winning trades as carefully as losing ones. Did you follow the plan, or get lucky?
4. Take some profits on a schedule, regardless of how confident you feel.
5. Compare with a benchmark. Did you beat simply holding BTC?

11.7 Try it yourself

Look at your best month of trading or investing. Count the number of trades or decisions, check whether you followed your rules, and compare your return with simply holding BTC over the same month. Then write a profit-taking plan for your current holdings, including at least one specific trigger.

Key takeaways from this chapter

1. Winning streaks often lead to overconfidence, larger sizing, loosened rules, and careless trades.
2. Short winning streaks happen by chance; skill shows through many trades, consistency, rule-following, and beating benchmarks.
3. In bull markets, many people look skilled; compare results with simply holding BTC.
4. Take profits through scaling out, rebalancing, recovering your initial investment, cycle signals, or schedules.
5. Move some profits to stablecoins, self-custody, savings, or real-world needs.
6. After winning, keep risk per trade constant, keep using checklists, and review wins as carefully as losses.