People should manage the allocation of assets even when trading Bitcoin

[yarlungzangbo]

People should manage the allocation of assets even when trading Bitcoin, the cruel reality is few people realized


Just for example

Let's see the volatility of bitcoin in 2019
It was increased from $3700(1Jan) to $7200(31Dec) in 2019, is about 90%

1. you put the 100% into the market you will get 90% return
2. if you put 10% into the market you will get 9% return , and minus the loss from inflation(about4%), you still have 5% return
3. if you put 20% into the market you will get 18% return, and minus the loss from inflation(about4%),you still have 13% reutun


Now you can see
The first strategy , you will get 90% return and you need to take about over 100% risk
But the third one, you will get 13% return and you just need to take a very low risk, you are so close to Buffett(just kidding)


So for the most trader, you might have the dream to be millionires, but the fact is you need step to step and manage the allocation of assets ,then you may have a chance to get the ticket to be millionires years later.

[leyton11]

in fact, no one can buy at the lowest price and sell at the highest price. It's easy to talk about profit, but it's hard to talk about losses. Ideally we should have a method of trading with a clear RR ratio. When bull market is coming, I usually use a 4: 1 RR ratio for alts with low marketcap. Because the majority of alts with small marketcap can grow strongly. Those are my market analysis and risk strategy, I've been using it and it's been quite effective for the past 2 months.

[yarlungzangbo]

in fact, no one can buy at the lowest price and sell at the highest price. It's easy to talk about profit, but it's hard to talk about losses. Ideally we should have a method of trading with a clear RR ratio. When bull market is coming, I usually use a 4: 1 RR ratio for alts with low marketcap. Because the majority of alts with small marketcap can grow strongly. Those are my market analysis and risk strategy, I've been using it and it's been quite effective for the past 2 months.

Don't buy because the stock price is low

[Jating]

Of course, this is one basic principle you have to understand not just in bitcoin investing, even in traditional market you should learn how to manage your portfolio. It really depends on how investors stratregised, maybe some are using the same plan as you pointed out, or maybe they everyone is using a different kind of attack. As for the dream of being a millionaire, you can't really do it overnight, takes a lot of time and money and practice and experience. That's why crypto trading is a very different league of its own. There's no one size fits all strategy. Everyone should work their butt off in order to chase their dreams of being successful in the future.

[Ryker1]

Well, the strategy you pointed out is common to many traders. As traders continue to grow in this battle they learn and continue learning each day of different strategies which they use as a tool to survive and leads them to their dream of becoming a millionaire as what you have mentioned. Asset allocation strategy is really a good one and must have by all traders because it might secure and indicate the assets that you have and the amount that you can afford of losing. Indeed, the risk is still the biggest challenge to all traders because no matter how good your strategy is it will still be subjected to risk of winning or losing.

[justdimin]

This is the perfect explanation of what I have always said, thank you very much by putting it this way. I have always said that you should never go all-in at once because that would make you lose a lot of money eventually. When you divide your investments into multiple parts you could be doing a lot better since you can't lose all at once. One more thing I would like to add into this that would both make you not earn as much but also make you enough money while keeping you safe would be adding money in installments instead of actually putting all of it in even if its just 20% of your money.

For example instead of buying bitcoin with 20% of your money, just buy with 5% of your money, after 2 months buy another 5% , after .. until you have 20% in 4 months. That way you would be safer and have a lower buy avarage most of the time as well.

[abel1337]

in fact, no one can buy at the lowest price and sell at the highest price. It's easy to talk about profit, but it's hard to talk about losses. Ideally we should have a method of trading with a clear RR ratio. When bull market is coming, I usually use a 4: 1 RR ratio for alts with low marketcap. Because the majority of alts with small marketcap can grow strongly. Those are my market analysis and risk strategy, I've been using it and it's been quite effective for the past 2 months.

Buying at a very low price and selling it on the highest price is possible, The only thing is you need a bag of luck in order to achieve it. It's not impossible though and it will depend on the timespan of your trade. It is very possible for daily trade. But buying an all-time low and selling in an all-time high situation is a very hard goal.

It's true though that it's hard to talk about losses because it can make us feel disappointed at ourselves that can cause more damage to us.

Managing and allocating assets is a smart way of lowering the risk and also a good way of earning a good amount of profits, Don't put all eggs in one basket.

[ryzaadit]

The fact is, most of the people were too scared buying on the bearish even went bitcoin was reached 3K USD. The psychology still one of the factors, went the bitcoin price on 3K USD a lot people will thinking bitcoin will die, the prize still can be reached 1K USD and other things who make them don't want to buy on that's price level. Because of that's they missed the opportunity and buying went the FOMO is begin.

I more agree "people should use money that is not used at all for their trading/investment purpose" so no matter on whats price they are buying as long they are buying on the bearish time, He just needs to wait until the bullish is coming and if the bearish keep continues he will not lose at all since he using unused money more like he already throwing the money on the trashcan.

[Findingnemo]

One who is willing to take such huge risks are literally new to the investment field because experienced once knows that going all is will get you rekt so always play safe.I will say 30% is a decent allocation to make good profits even if you are extremely unlucky with your trading you still got 70% to recover the losses you made on trading by just holding the bitcoins.

[avikz]

People should manage the allocation of assets even when trading Bitcoin, the cruel reality is few people realized


Just for example

Let's see the volatility of bitcoin in 2019
It was increased from $3700(1Jan) to $7200(31Dec) in 2019, is about 90%

1. you put the 100% into the market you will get 90% return
2. if you put 10% into the market you will get 9% return , and minus the loss from inflation(about4%), you still have 5% return
3. if you put 20% into the market you will get 18% return, and minus the loss from inflation(about4%),you still have 13% reutun


Now you can see
The first strategy , you will get 90% return and you need to take about over 100% risk
But the third one, you will get 13% return and you just need to take a very low risk, you are so close to Buffett(just kidding)


So for the most trader, you might have the dream to be millionires, but the fact is you need step to step and manage the allocation of assets ,then you may have a chance to get the ticket to be millionires years later.

What you are talking about is known as "Risk Reward" principle in management lessons. The more risk you take, your chance for reward increases accordingly and vice versa. However, the risk appetite of every individual is very different so you can't really generalize everyone here. You may not see a $1 bill as a very high value reward to you, but a beggar can fetch a scrumptious meal with that same $1 bill (at least in my country). So along with the risk appetite, the value realization is also different for each individual. That's human nature!   

[carlfebz2]

So for the most trader, you might have the dream to be millionires, but the fact is you need step to step and manage the allocation of assets ,then you may have a chance to get the ticket to be millionires years later.

Risk management is always the main priority on here when it comes to investment and it depends if a certain individual would risk out neither 100% or 10% on his capital which would vary if he's sure or just doing some sort of gambling.

We dont know on whats up into their minds but since its their own money then they can put on how much as they like but we know that allocating sufficient percentage depending on your entire funds would be ideal because if crash or bad things happen you can still have the chance of recovery
on other investments you do had.

Proper handling and  management of your investment would really be they key for you to sustain here on crypto world because if you do let
yourself tagged by your emotions on each decisions you would make then most likely you will fail.

[ScamViruS]

Very few traders have bought at the bottom. Because they thought Bitcoin would dump more and even dreamed of buying Bitcoin at 1k. But their dream did not come true. Buy low sell high This is not as easy as it may seem, for this you need both experience and luck. However, not all traders have same kind of risk management strategy. From my own strategy I will trade with 20% because the risk is less. Because there is a chance of rekt. So playing safely is good. If you want to become a millionaire by trading, you need to spend more time learning to trade.

[yarlungzangbo]

Very few traders have bought at the bottom. Because they thought Bitcoin would dump more and even dreamed of buying Bitcoin at 1k. But their dream did not come true. Buy low sell high This is not as easy as it may seem, for this you need both experience and luck. However, not all traders have same kind of risk management strategy. From my own strategy I will trade with 20% because the risk is less. Because there is a chance of rekt. So playing safely is good. If you want to become a millionaire by trading, you need to spend more time learning to trade.

Yeah, the first thing to become a millionaire is to pay for your mistake in a very long time

[The Cryptovator]

Its simple, there is some conventional proverb "don't put all your eggs in one basket". On the other hand, "high risk high gain, no risk no gain". Even you are going to invest something on your real life you shouldn't invest all of your money at one place. Same as for bitcoin as well. You shouldn't invest all of your funds. If you invest 30% then if incase bitcoin go more dip then likely you may accumulate few more and you will have a good return. But always you shouldn't expect high return from bitcoin because this isn't any investment platform like Ponzi. You should know the risk involved with it. You can see those peoples invested on ATH they never gained profits from bitcoin if they are still holding. But likely they sold in loss and trade again to recover, but who know?

[Harlot]

I don't think that's how allocation works when it comes to trading. If you set aside some capital meant for trading then it is really up to you if you want to focus on putting it in one asset or put it in several assets. You really don't care about the risk and reward since you have already allocated money meant for trading. Portfolio management is what you are talking about here when you are saying "allocation" this is where the saying "Do not put all your eggs in one basket" goes since you are limiting you capital in an asset so that if it fails you have mitigated the risk of losing all of your capital.