Risk Management (the most important rule)
Rule 1: Never put your capital at risk
Rule 2: Never put your capital at risk
Rule 3: Protect your capital
We hear all the time that this guy puts $1000 into some risky ICO/High Risk investment and makes a ridiculous 5000% return on investment and gets rich but this only happens to 1% of the people 1% of the time, the other 99% of people will lose their money.
For this reason let's stick to the strategy that works for 90% of people 90% of the time.
Diversification + Risk Management
Rule 1: Don't put all our eggs in the one basket
Rule 2. Put the majority of our money in solid, safe & predictable projects/coins (80%). - "Protect Your Capital"
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Diversification + Risk Management + Strategy
Rule 1: Pick 4 Sold, Safe & Predictable coins for the top 10 MarketCap and put 20% in each of those 4.
Rule 2: For the other 20% pick one or a few higher risk projects outside the top 10 which has a good chance to outperform the market leaders (blue chips). The more risk it has the less weight you give it.
Sample Only; (this is not advice, do your own due dilligence)
4 Solid Coins "80%" (from the top 10 marketcap)
BTC 20%
ETH 20%
LTC 20%
XLM 20%
3 High Risk Coins "20%" (not found in the top 10)
EOS 12% (top 20)
QSP 7% (top 100)
XSPEC 1% (outside the top 100)
Dollar Cost Averaging (DCA) + Buying Low
DCA: Means that every week we are investing $100 in crypto rather than investing $1,000 all at once, DCA gives us an average price of the market and ensures us we don't over pay.
If we would invest $1,000 all at once, the market it may crash the next day and we would lose 50% or more of our capital (dont break the first rule). And at the same time if the market crashes we would have no extra money to buy in low because we have already used 100% of our capital.
Invest $100 per week and buy into the one which has a low price. (meaning the price is not at new record highs, like how XRP & XRB have been lately). I prefer to look at coins I like which have dropped 15% or more when choosing to buy in.
Summary:
- Don't put your capital at risk
- Use the strategy that works for 90% of people 90% of the time.
This is just my opinion, not financial advice!
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