1. Why manage capital? - The core of capital management is to balance one's PSYCHOLOGICAL STATE. This means strategizing to allocate and rotate capital so that in situations of temporary losses, your mindset does not lose direction and fluctuate strongly. Pay special attention to the two terms ALLOCATION OF CAPITAL and ROTATION OF CAPITAL.
2. The secret or way I manage capital is HOW TO HANDLE LOSSES (here we do not discuss cases of profit because when there is profit, we must discuss the next investment plan; of course, when there is profit, we love nature and flowers, and we are no longer aggressive and destructive).
3. The Portfolio must be extremely lightweight so that one can FOCUS & FOLLOW the projects they are holding. Do not spread too thin, weakening one’s limited resources (money, time, brainpower), and do not fall into the effect of 'the grass is greener on the other side'.
4. In my view, an optimal portfolio will include 2 long-term coins, a maximum of 3 medium-term coins, and especially important is a portion of USDT reserve equivalent to 1/2 of the total volume of long-term and medium-term coins.
For example, if the total volume of 3 medium-term coins is $3000, then the minimum USDT reserve is $1500.
5. The most important thing when investing is ENTRY, and the next important thing is also ENTRY. Finding and being able to assess whether a project has potential is a matter of EXPERTISE, not INVESTMENT. Investment is about ENTRY, the way to allocate capital into the project, and the strategy for exit (taking profit). A good ENTRY is usually at the beginning of a new uptrend of a coin and must coincide with the new uptrend of the overall market.
6. THINKING ABOUT USDT RESERVE - USDT is seen as a stable coin that almost does not generate profit, and because of this thinking, many people are restless and always seek to invest all their capital. A BIG MISTAKE. USDT should be considered as hold capital with the highest likelihood of profit. It seems like a stable coin, but it is the most stable in terms of profit. For example, holding $1500 for a month without any profit, but if the market crashes hard, using that $1500 to catch the bottom of strong coins like BNB or LINK can provide a very high profit ratio (not buying low-quality coins). So that $1500 is no longer a stable coin; it is precisely an investment waiting for market events. Pay close attention, this USDT amount is not meant for DCA in any trade. While the market is crashing, projects that are being held suddenly bleed out but still have capital power to achieve 20% - 30%, the PSYCHOLOGICAL STATE is once again stabilized. In summary, the USDT RESERVE is indeed a very powerful STRATEGY.
7. AVERAGE PRICE IN CAPITAL ALLOCATION (DCA) - if I intend to allocate a total volume of $1000 for a trade, I will usually place the first order around $300 - the next DCA order of $300 when the price drops by 30% and the final DCA order of $400 when the price drops by 50%. If the average price still drops another 20%, I will graciously accept that trade. A MISTAKE is that many people plan $1000 for one trade and then calculate an additional undefined DCA amount for that trade, which is doing something without a clear limit while money has limits.
8. Note that you should distinguish between USDT capital for DCA in one trade and the USDT reserve mentioned above. The way to handle a loss in one trade is that the remaining USDT after cutting losses will be rotated into one of two places:
+ First, consolidate into the USDT reserve, be PATIENT and wait for the market to dump deeply to buy the dip, catching the strong positions to recover from the lost trades.
+ Second, it is used to increase the amount of coins held long-term that I have determined to invest value into at good price levels. Choosing the project to hold is another topic.
Sincerely
Determined to win!