Post by: @CryptoLanger
Two steps as a subnote to this article: Download CoinStats app for your phone to track real time prices of your portfolio. Register to CoinTracking.info and keep track of your trades from the beginning so it doesn't lead to big headaches at tax time.
DYOR. (Do Your Own Research).
This is really all there is to it. Like I mentioned in previous text, visit Reddit, Steemit, Bitcoin Talk Forums, read comments on Twitter and track coins that look promising based off their charts and past growth. Find their website (check reddit first to make sure nobody is claiming it’s a scam) and investigate. Things you want to find when searching for good coins:
Market Cap, Coins in Circulation and Total supply (A coin with 5 million total supply has a much easier chance increasing into the $100's than a coin with 50 billion total supply). Do the math on this to determine whats the value of the coin comparative to Bitcoin.
Price gains in the past
Strong, reputable, active management team? Are they on twitter a lot answering questions and posting news keeping investors engaged? Do they look like they have strong educational backgrounds?
Is the coin worth your investment? What are they trying to accomplish with this coin and who are there competitors? Do they have an advantage? Are they trying to fix something that isn’t broken? Or are they making new advancements that could be game changing and disruptive technology?
You’ve checked that the coin doesn’t have a bad reputation/scam coin etc?
That’s essentially it. Research well and see strong returns. Research poor and get stuck bag holding or Rekt!
Tailoring your Portfolio:
First off, I should say these two points. Never invest more then you can afford to lose. And keep cryptocurrencies as a percentage of your overall investment portfolio. As in, stay invested in stocks. Yes, Crypto might have prettier returns. But to be an intelligent investor its up to you to be smart with your funds. Decide how much of a percentage you’d like as your high risk high reward bucket (based off years left of investing before retirement, current money situation, etc).
Now that’s out of the way, you have your funds allocated for cryptocurrency and are trying to decide on how to make a balanced portfolio. One rule is different from stocks. You don’t Rebalance (as often). Due to the lack of market makers and many other differences it just doesn’t apply in the crypto markets. If you rebalanced your stocks each year, you would have significantly missed Ripples 36,000% 2017 run up or Bitcoin 1000% run up or Tron’s 800% run up in a week. Its fine to skim profits off a pump but just remember its such a young market still that lots of these coins are just simply growing and when the market dips it dips across the board so allocating to a different coin and losing your dirt cheap
buy point to move in to a coin more expensive doesn’t make sense here.
That is speaking in terms of coins you want to HODL. Create your portfolio how you see fit. If your going to be hands off then I would have a 100% HODL portfolio. If your going to be on the exchanges daily Id do a 25% HODL portfolio, 25% Day Trading, 25% Swing Trading, and 25% USDT (tether – which is essentially equivalent to $1USD at all times... it’s the loop hole for keeping your money in crypto without exchanging back to fiat WHILE being able to shelter it away from the dips of crypto markets in the days there are blood in the streets of the markets). Percentages are irrelevant they are just guidelines, go based off which coins you want and how much you want to hold of each.
Ways to diversify:
Large Cap/Small Cap coins
Types of coins (Privacy, Currency, Platforms, financial)
Cash out principle out of profits on big jumps and move to Tether for dips
Keep some coins on hardware wallets, some on exchanges
Some in ICO coins, some in top 10 coins, etc.
These are just ideas you can use. Ideally find coins you feel are disruptive, game changing technology that you would love to stick with long term and invest in these. And keep how many coins you own less than 10 ideally. (Don’t over diversify because if one of your coins takes off you want to hit the jackpot you don’t just want to watch an 800% ROI get you a measly $1000 profit.
Also, an FYI for the Cryptocurrency trading market. Brace yourself for volatility. Don’t expect 1000% gains without the sight of seeing 50-80% dips. With a market that produces gains that high its only all but healthy to see corrective dips occur to that extreme. The longer it goes without massive dips like that the more likely it becomes of an imminent massive dip. Just remember just look at history. If Bitcoin were going to die it would have died hundreds of times by now. (There is actually a Bitcoin Obituary site that tracks every time bitcoin crashes). Spoiler alert, each time it came back with higher and stronger.
I can’t write my 2018 portfolio as the coins I hold will be changing throughout as a strategy, but I will say here’s my general class breakdown/game plan:
1 HODL coin: Ethereum (eventually, 1BTC as well)
Day Trading: Day Trade BTC/ETC and other Altcoins that show upward trends
Swing Trading: Using Technican Analysis for entry and exit points
Mid range holds: Coins I like and swear by and believe they will have massive ROI in 2018.
I will split the coins I own to ensure I have coins the spread across these classes:
Large Market Cap
Micro Market Cap (ICO’s that are just released on exchanges)
Privacy coin, Platform coin, Currency Coin (at least 1 of each)
I will use USDT(Tether) When I see a Pump occur in a coin to capture profits and save for rainy days.
If Market grows euphoric I will remove principle into USDT as you know its becoming evermore expected of an
imminent correction.Will TRY to keep under 10 coins. This will limit me but in order to maximize gains this will have to be done.
This is not financial advice, like all of my posts this is just my opinion and what I like to do.