In a bull run, which signals should make you start trimming?

Every time a market heats up, someone comes to ask me the same question: "Have we topped out yet?"

My answer is always the same: I don't know. I really don't. Guessing the top is something even people who've done this for decades can't do well; an ordinary person who lost money getting cut in half in 2022 has even less of that ability. So from start to finish, not one word of this piece is a judgment about price.

But there's something I can do, and so can you: observe yourself. When a market heats up to a certain degree, some very typical signals will appear in you and around you. These signals don't tell us where the market goes next; they tell us only one thing — the risk you're carrying right now may already exceed what you'd be willing to carry when calm. Whether to pull back a little — that's the question to ask, not "where's the top."

First, to be clear: this piece doesn't predict price

I have to make this layer clear over and over, so you don't misread it as you go.

None of the signals below is a "price indicator." I won't say "a rise to X is the top," nor "when XX appears you should sell." Because how the price will move, neither I nor anyone else knows. These signals are all about you: your emotional state, your behavior, the share your position takes in your account. They measure "are you getting carried away," not "has the market topped."

Why is this angle more reliable? Because you can't manage the market, but you can manage yourself. Guessing the top right is luck; managing your position is a skill. This piece only talks about the latter.

Signal one: people who never trade start asking

The first signal is at your dinner table and in your family group chat.

When those who normally never touch this stuff — who can't even tell you "what's a wallet" — your parents, your colleagues, the taxi driver — start bringing up crypto to you and asking "is it still in time to buy now," it means the topic has spread to the outermost ring of the crowd.

I won't say this means the price is about to fall; that's a separate matter. What I'm saying is: when a thing gets hot enough that even outsiders are swept in, the excitement inside has usually piled up very thick. And the thicker the excitement, the more easily a person, without noticing, stacks their position higher. This signal reminds you to glance back at your own position, rather than charge in further along with everyone else.

Signal two: you start getting carried away yourself

The second signal is in your own head, and it's the most accurate.

Think back on your recent state: have you started checking the price frequently, every few minutes? Have you started calculating "if only I'd bought more back then, now I'd…"? Do you find anyone who disagrees with you stupid, and feel "this time it really is different"?

These are all the look of getting carried away. Being carried away is itself a signal to be wary of — not because it can predict anything, but because once a person is carried away, the decisions they make are basically impulsive. My 2021 top-chase was made in exactly that state: my head was full of fear of missing out, and I wasn't making any calm judgment at all. On how this psychology works your hand, I wrote a dedicated piece: Why you always chase the top and sell the bottom.

Signal three: you've toyed with the idea of leverage

The third signal is when you start to feel "the spot position earns too slowly — maybe I'll add a bit of leverage to amplify it."

I pull this one out on its own because it's the most dangerous. Leverage means borrowing to amplify your position: gains double, but so do losses, and when the price moves against you to a certain degree, your principal gets wiped out outright, with no chance to hold it back. For beginners, my stance is blunt — don't touch it. This isn't buy or sell advice; it's risk-control common sense: you haven't even gotten used to the unleveraged volatility yet, and adding leverage will only break you down faster emotionally.

So when the thought of "adding leverage" pops up, it's itself a mirror, reflecting how carried away you already are. The calm you wouldn't think of this. What to do at this moment isn't to open a leveraged position; it's to stop and check whether you've already gotten high on it.

Signal four: your position long ago blew past your cap

The first three signals lean on feeling; this fourth is a hard number, and it's the one most worth watching.

Before you got in, you should have set a cap for crypto as a share of your total assets — say, no more than 10%. But a run-up causes something quite stealthy: even if you didn't add a single cent, just from it rising, this block's share gets passively stretched bigger and bigger, perhaps without your noticing into 25% or 30%. You didn't actively add, yet your risk exposure has quietly multiplied several times over.

This is a purely objective signal, unrelated to your emotion or to whether the market has topped. It asks one question only: is your current position share still within the line you set when you were calm? If it long ago blew past it, then no matter which way the price goes, pulling it back to the cap is executing the rule you set yourself in the first place. This action has a name — rebalancing — which I wrote in After it rises: how to rebalance.

Seeing a signal, what to do by the rules

Having laid out four signals, I should say what to do after seeing them. Once more for emphasis: the following is not buy or sell advice; exactly how much to trim, and whether to trim at all, you have to decide for yourself. I'm only describing the logic of how I do it.

My principle is: when these signals appear, it means it's time to "adjust by the rules set in advance," not to "keep piling on out of current excitement." The difference between the two isn't whether you trim; it's whether the plan is making the decision or the emotion is.

• Go back to the plan you made before getting in. Did you write "trim back in batches once it rises to the target share"? If you did, now is the time to execute it, not to overturn it. How to write it in advance, see Taking profit and cutting loss.
• Pull the part over the cap back. Not a full liquidation — trimming the share that got stretched up by the rise back to the line you set. That's rebalancing.
• Don't chase selling at the very top. Trimming by the rules was never about precisely escaping the top — that can't be done. It's just to avoid piling your position up to a size you can't withstand at the hottest moment, nothing more.

Recap

I don't know where the top is, you won't either, and don't let anyone fool you into thinking they do. But we can all see ourselves: outsiders start asking, you start checking the price frequently, you've toyed with the idea of leverage, your position long ago blew past the cap — these four signals measure how carried away you've gotten, not whether the market has topped.

The one thing they remind you of: go back to the rules you set when calm, and pull the position back inside that line. The standard for whether you did it right was never whether the price rose afterward, but whether you held to your own rules at the time. Next time, I want to thread the whole rhythm of a first year, from a small test position to slowly adding to the cap, start to finish.