Have you ever wondered which of the hundreds of cryptocurrencies to buy? And once you do buy, when do you sell? Well, I have too. After thinking about this dilemma for some time, I have decided to incorporate the strategy of portfolio rebalancing.
According to Investopedia!, "Rebalancing is the process of realigning the weightings of a portfolio of assets. Rebalancing involves periodically buying or selling assets in a portfolio to maintain an original desired level of asset allocation."
So, my plan is to invest / speculate in the top ten cryptocurrencies as measured by market capitalization. The top ten currencies have proven themselves to be in demand above and beyond the other hundreds of currencies. A site that provides market capitalization of almost all of the cryptocurrencies is CoinMarketCap.com.
This week I will share with the Steemit community a buy/sell strategy that I use. In the table below, you will see that I will assign $200 each to the top then currencies, and keep $200 in reserve.
For a normalized portfolio of $1,200, I would assign equally $1,000 to the top 10 cryptocurrencies by market cap, and $200 to a U.S. dollar fund. On a weekly basis, I would rebalance the account, by selling those currencies that have increased in value and buy those currencies that have decreased in value. As the dollar is one of the currencies in the portfolio, I would buy dollars as the value of cryptocurrencies increased (selling high) and sell dollars as the values of cryptocurrencies decreased (buying low).
Maintaining an equal apportionment between the cryptos also keeps them in balance - by selling those as they go up, and by buying those as they go down. And, as we are keeping only those currencies in the top 10 by market cap, new up-and-coming currencies will be bought, thereby replacing those that are losing favor and value.
This is my personal trading strategy, and is not trading advice.
Be sure to follow me @GovernorOfMesa, as I do plan to track my progress and post the results here on Steemit.
And don't forget to comment - I appreciate your input!
Until next time ... Best to you.