Cryptocurrency is booming up and everyone is looking for an opportunity to make a big money at there. People are reading and watching so many things through online to understand where the biggest opportunity is, however many of them are not really considering risks in this new market.
There are famous rules mentioned by legendary investor Warren Buffet which are:
Rule No.1: Never lose money.
Rule No.2: Never forget rule No.1.
There are bunch of financial strategies to maximize earnings and minimize risks at the same time when you invest. Mostly these strategies are proven in stock market for a more than half century. Well, you don’t need to be an expert when you invest stock market. There are many of reputational investing companies who is really good at financial engineering. Unfortunately we don’t have very much choices in cryptocurrency investing.
Let me tell you one very simple example.
There is a very generous gambling game for beginners. 70% probability of getting double of your money, on the other hand 30% chance of losing money. Let say you have 1,000 dollars. If you bet 10 dollars each time, then sometimes you get double but sometimes you lose betting money. However you have average expected return of 14 dollars for each game, so you will make more and more money over the games for sure. But if you bet all your money at once always, then you might be lucky for first couple of games or you will lose all your money at the first game. Possibly you can get 4,000 dollars after 2 games. But you will lose all your money at the 3rd game. Can you distinguish the simple difference which makes totally different results ?
I’ve learned financial investing when I was back in university. Over more than 13 years of stock investing, I’ve got less than 10% of profit in certain years, more than 70% in some years. The most important thing is that I never lost single penny in my life. Do you think I’m really special or kind of genius? Not at all ! I’m simply following my risk management rules which mostly came from well-known financial investing theories.
If you follow the same thing, in other words if you keep the several very basic rules, you’ll make profit above market average and never lose money.
Are you interested in listening more from me ? Please cheers me up to share more time for next couple of articles.