I hope that you have already read the post about assessing non-market risk. Because you can only think about investing if the asset fundamentally meets 3 parameters.
A couple more important words about my investment strategy: I buy assets that grow in price over the long term: Nasdaq country indices, $PAXG (tokenized gold), $BTC, rare plant seeds and pieces from meteorites.
📈 Growth potential in these assets: infinity ♾️
📉 The potential for loss from one asset is “only” up to 100% (since this is spot, and I don’t trade futures). This is the base. But the potential for correction is always different and changes depending on what is happening in the world.
In this article we will talk about assessing market risk, which is a much more complex and interesting activity.
▶️ For example, let's take BTC.
Now (and indeed always) there is a risk of correction of different levels:
1) up to 20% (correction, standard haircut).
2) -20-50% (crisis haircut).
3) -50-80% (black swan haircut) 🦢
💰 How to assess the probability of risk at each level?
This is where my work begins: analyzing an asset based on market indicators and market phase. I'll tell you about the basic level 1 indicator.
The “technically easiest” indicator to use is the “Fear and Greed Index”, which I periodically write about on this channel. This is a complex indicator that includes: open interest, search queries, media sentiment, etc. And the indicator works very simply, the instructions are in just 4 words:
📈 Buy fear and sell greed 📉
This is enough to make money in the market in the short and medium term, but most people do the opposite, so they lose in the market 🤷♂️ Now the indicator is at 74 (greed). I hope you understand that now it’s better to do short-term with positions :)
I do not engage in trading or speculation, since trading robots cope with this task much better.
🎨 My task in the market is more creative: to collect/rebalance medium- and long-term portfolios for myself and large clients.
If you have large capital, I can provide consultation on your portfolio.
📝 Risks of correction are always present - this is the very unknown (uncertainty) that scares all newcomers to the market. But I invest in assets that grow over the long term, so I and all my clients always have an investment position, which I rebalance according to the Fear and Greed index, as well as other higher-level indicators.
⚠️ As you understand, this is a strategy that works for me, since I have many more indicators in my arsenal to accurately determine the breakdown of movements in the market. This is my profession and I make money from it.
I will share different secrets, so if the post was useful, I recommend subscribing, I’m already preparing a pack of ideas with great growth potential 🚀
