INTRO
I always extend myself too much, I get passionate. But I will try in this first part to go from the theoretical to the practical without reaching total boredom! 😴
It is a very exciting topic and long to explain. I can't pour everything I've learned into a single article. We will go through it together step by step. So be patient, Young Padawan! 😔🙏
There are three types of returns:
Promised return (the one they tell us)
Expected return (the one we dream of)
Observed return (the real life one)
When we observe third-party technical analysis, we agree to accept promised returns. When we analyze the price action on our own, we accept expected returns. But, as time goes by, real life shows us the real return: the observed return. Which often does not coincide with what is promised nor with what is dreamed. 😖
When it comes to making money, I don't like to be told... nor do I like to daydream. I like to work with returns observed in real time. 📉📈📊
I clarify this because what you are about to learn from now on will separate you from the rest of the zombie herd. It will allow you to invest professionally, for once, accumulate the greatest amount of cryptocurrencies over time, and earn LONG TERM: more money than you can currently imagine. Right? 💰💰💰
So pay close attention and don't miss a detail, because in this article you will learn advanced concepts on how to better take advantage of market volatility and become very rich in the process.
- That said, let's begin...
I know many of you speculate in the futures market, I really hate that market. But I am going to show you another way, the best way to invest your money in the SPOT market, without having to trade every day, nor wait bitterly for them to take you out of the market at a loss, for you to get liquidated, nor be glued to the screen analyzing prices like all traders do.
The first concept you must learn is the theory of Portfolio Rebalancing. Why? Because it is the only thing that will allow you to accumulate more cryptocurrencies over time and increase the total value of the portfolio in USDT without wasting your time on price analysis or manually reinvesting as you have been doing.
* Time, accumulation, and volatility. These are the three variables you must pay close attention to if you want to be truly rich. 💎
CREATION OF A PORTFOLIO
First, we must choose several cryptocurrencies, invest in them a proportional, equitable, or specific amount of our initial capital, establish a deviation rate according to the actual price variation in the market, and obtain the best results so that we can earn the most fiat money (USDT) in the "LONG TERM" and accumulate: the largest amount of cryptocurrencies; regardless of the market trend. Yes, you read that right, regardless of the market trend! 🤨
- That is, you will accumulate cryptocurrencies even in bear markets. But, the total value of your portfolio expressed in USDT will be reduced. But don't be sad, because you are still continuing to accumulate more cryptocurrencies and you know well what happens next in a bull market when you have many accumulated units of a cryptocurrency that is about to explode upwards, right?... Well, let's not rush! Calm down ... 🫖🍵☕
VOLATILITY
It is the rapid and prolonged fluctuation of the price of an asset in the market. Volatility is the enemy of traders in futures, you know why! The liquidation algorithm, remember. But in this new scenario that I will show you, volatility is your FRIEND and it is what will help you become an extremely rich person. 💰💰💰
PORTFOLIO REBALANCING
Oh! we've arrived at the most important concept. Something that no one talks about... well yes, I do. But I mean that it is TABOO to talk about portfolio rebalancing in cryptocurrencies. Now I will start to explain simply what it is about and you will see how, little by little, your current trading knowledge will make much more sense and importance if you use it in a new way and applied to the concept of portfolio rebalancing. 🗒️✍️
Now imagine a portfolio with several cryptocurrencies, portfolio rebalancing means selling (high) a percentage of those cryptocurrencies that have increased in price and with the money from these sales: buying (low) the same percentage of those other cryptocurrencies that have decreased in price. That is why it is called portfolio rebalancing, it attempts to make all the assets within the portfolio have the same value in dollars (USDT) regardless of the amount of units accumulated of each cryptocurrency. (Take a deep breath👃and take a break... ☕)
- Nothing is better than demonstrating it with a good example.
PORTFOLIO
Total Capital: $100,000 USDT
Initial Investment: $10,000 USDT
Initial Allocation: 10% Equitable. ($1,000 USDT invested in each cryptocurrency)
Number of Cryptocurrencies: 10
Actual Price Variation: 10%
Deviation Rate: 1%
If you have $100,000 USDT total to invest in cryptocurrencies, you could start by dividing it into 10 packages of $10,000 USDT. Then choose 10 cryptocurrencies and invest $1,000 USDT in each one. Now let's say you want to set a deviation rate of 1% to trigger rebalancing every time the real market price of the cryptocurrencies varies +/- 10%. That is, if the market price rises or falls by 10% compared to the purchase price (reference), rebalancing is executed. I hope it is understood, if you do not understand this part... take a deep breath 👃, take your time ⌛ and read again... ☕
DEVIATION RATE
It refers to the percentage amount that an asset deviates from its initial allocation. Remember that the portfolio had 10 cryptocurrencies, with an initial investment of $10,000 USDT assigned equally. That is, 10% of the initial capital assigned to each cryptocurrency, or $1,000 USDT to each one. If the deviation rate is 1%, it means that within the context of the portfolio if a cryptocurrency rises or falls by 1%, rebalancing is activated. For example, if a cryptocurrency rises from 10% of its initial allocation to 11%, that additional 1% rise is sold and the USDT from that sale is kept.
PRICE VARIATION RATE
It refers to the percentage rate that the real market price of a cryptocurrency must vary. This price variation rate depends on the deviation rate we define. Since the deviation rate is 1%, this implies that the real market price of a cryptocurrency within the portfolio must vary approximately 10%.
- I repeat again, you are traversing advanced concepts to operate in the SPOT market like never before. If trading in futures seemed advanced and super professional to you, just wait to understand the new landscape of strategically investing in the SPOT market and I promise your brain: it will explode! 🤯
Later we will see if speculating in futures is an investment and if it is really that professional... 😏
- See you in the second part...
🔔 Now good luck with your trading! 💰💰💰
