How Big Should Your Moonbag Be?
By moonbag.info team · · Intermediate
A moonbag is the part of a position you keep after taking profits. The idea is simple. The hard part is deciding how big it should be. Keep too much and you may give back gains you could have locked in. Keep too little and a big further rise may leave you with regret.
There is no correct size. This guide gives you a few frameworks to choose one deliberately. All examples use placeholder assets and illustrative numbers.
What a moonbag is for
Before picking a size, be clear about the job it does:
- Optional upside. If prices keep rising, you still have exposure.
- Regret management. Selling everything and watching it double again is painful. A moonbag softens that.
- Peace of mind. Once your main profits are taken, the moonbag is money you’ve decided you can afford to see fall, possibly to zero.
That last point is the most important. A moonbag should be sized so that losing all of it would not change your financial plans.
Framework 1: percentage of the original position
The simplest approach. Decide that after your profit-taking plan finishes, you’ll keep a fixed share of your original units, often somewhere between 10% and 30%.
Example. You bought 1,000 units of Token A. You plan to keep 20%, or 200 units, and sell the other 800 through a ladder or a time-based schedule.
Good for: people who want a simple rule.
Framework 2: “house money” moonbag
Sell enough to recover your original investment, plus perhaps an amount to cover expected taxes, and treat what’s left as your moonbag. See Taking Out Your Initial Investment.
Example. You put in $1,000 and the position is now worth $4,000. You sell $1,000 to recover your cost, and set aside more for taxes owed on the gain. The rest is your moonbag. Its size depends on how much the price rose: the bigger the gain, the bigger the moonbag.
Good for: people who care most about not losing their starting money.
Framework 3: percentage of your total portfolio
Size the moonbag so it never exceeds a set share of your whole portfolio, for example 5%. This ties it to your overall position sizing rules.
Example. Your total portfolio is $20,000 and your cap is 5%, so the moonbag should be at most $1,000. If your Token A moonbag grows to $3,000, you trim it back to $1,000 at your next review.
Good for: people who want consistent risk across all holdings.
Framework 4: the “regret test”
Ask yourself two questions:
- “If Token A goes to zero tomorrow, how much would I be OK having held?”
- “If Token A goes up 5x from here, how much would I want to have held?”
Pick a number between your two answers. It’s informal, but it makes you face both outcomes honestly.
Comparing sizes
Imagine a position worth $10,000 after a big gain, with these moonbag choices. Then imagine two futures.
| Moonbag | Locked in | If it falls 80% | If it rises 3x |
|---|---|---|---|
| 10% ($1,000) | $9,000 | $9,200 total | $12,000 total |
| 25% ($2,500) | $7,500 | $8,000 total | $15,000 total |
| 50% ($5,000) | $5,000 | $6,000 total | $20,000 total |
Illustrative, before fees and taxes. A larger moonbag widens the range of outcomes in both directions. A smaller one narrows it. The right choice depends on how much uncertainty you’re comfortable with.
Practical steps
- Choose a framework (or combine two, such as “recover my initial investment, but cap the moonbag at 5% of my portfolio”).
- Write the size down before you start selling.
- Decide whether it’s ever for sale. Some people never sell their moonbag. Others sell it only at a very large gain or after a set number of years. Decide now.
- Store it deliberately. A long-term moonbag is often moved to self-custody, such as a hardware wallet, so it isn’t exposed to exchange risk. See Moving From an Exchange to Self-Custody.
- Review once or twice a year. Check that it still fits your portfolio limits.
Taxes
In the US, holding the moonbag for more than a year generally means any eventual gain is taxed at long-term capital gains rates, which are usually lower than short-term rates. Keep records of the cost basis for the units you kept. Consult a tax professional for your situation.
Common mistakes
- A moonbag that’s really the whole bag. Keeping 70% “as a moonbag” is just holding.
- Rebuying into the moonbag. Adding more after selling defeats the purpose.
- No rule for when it grows. A moonbag that rallies can become your largest holding.
- Keeping it on an exchange indefinitely. Fine for some, but understand the custody risk.
- Losing track of its cost basis. You’ll need it when you eventually sell.
Key takeaways
- Size your moonbag so losing all of it wouldn’t hurt your plans.
- Pick a framework: percentage of position, house money, percentage of portfolio or regret test.
- Decide in advance whether and when it’s ever sold.
- Store and track it deliberately.