In the past two weeks, the cryptocurrency market has been booming, with various currencies taking turns to perform, but the money-making effect is still mixed. The market always follows the 80/20 rule. If you chase the rise and fall without a strong opinion, you will fail miserably even in a bull market. There is no optimal investment method, only an investment strategy that suits you. Long-term, short-term, spot, futures, etc., which one is suitable for you is related to your personality. At the beginning, you can imitate others, but in the end you must form your own style and stick to it. This is very similar to life. The following five rules are very representative.

Asset Allocation

James Tobin, an American economist and winner of the Nobel Prize in Economics, once said: "Don't put all your eggs in one basket." When applied to investment, this statement speaks to a very important truth: assets need to be allocated, investments need to be properly diversified, and one should not over-concentrate on holding a single asset. Funds, deposits, bank wealth management, etc. should be held dynamically in relevant proportions. It is difficult to control risks if you buy all digital currencies or all stocks.

Funds, stocks, digital currencies, cash, etc., how much is put in each "basket" determines whether investors can safely survive the risk. Investment should be dominated by rationality. If you invest all your money in a rush, it is not investment, but gambling. Not only will it cause family conflicts, but you will also be under great pressure, affecting your normal work and life. Let me tell you a real example. I once had a friend who traded stocks. He used all his funds to buy stocks, but they were suspended not long after. How embarrassing it was to borrow money in the end. So keep cash on hand at all times and balance asset allocation.

Back to the currency market investment, for most people, digital currencies represented by Bitcoin should belong to the highest risk category, at the same level as futures, and the investment ratio should not exceed 20%. For a very small number of investors with different analysis perspectives, Bitcoin may be at the same level as base currencies, which can be higher than 40%. Everyone's knowledge structure and theoretical framework determine his understanding of investment products. Foreign capital markets are relatively mature, and most funds are managed by institutional investors. Domestic investors are mostly individual investors, so asset allocation is very necessary. Advocating the concept of asset allocation is to ensure the safety margin of investment.

Diversification

After achieving the asset allocation mentioned above, you still need to diversify your investments. Cryptocurrency is a large family. You can see many varieties on the exchange. In addition to Bitcoin, there are also many other digital currencies such as Litecoin. The development concepts of various digital currencies are different, so investors need to study them carefully.

Investors in digital currencies should know that the value of Bitcoin now comes entirely from the trust in the system. In the worst case, the value can be reduced to zero. Therefore, the risk of investing all in one currency is undoubted. If someone runs away, you may lose everything. In the end, it will be a perfect ending. It is recommended to take out a part of your digital currency assets to invest in other currencies. As for the proportion, it depends on your own understanding of the investment product. You must have your own opinions and style.

Personally, I think the best investment configuration in the field of cryptocurrency is about 40% mining (the only blood-making coin production, repeated investment in the coin market, low cost and long cycle), 30% holding mainstream (BTC, BCH, ETH long-term holding), and 30% participating in small currencies (cornerstone, private placement, secondary market one cycle of 3-4 months). This configuration can be used for offense or defense, and has an excellent risk-return ratio.

Driving the levers

Archimedes said: "Give me a fulcrum, and I will move the whole earth!" The reason why he was able to move the whole earth was not only because of a fulcrum, but also because of a long lever. What is a lever? Its essence is to use a small investment to achieve a huge output.

Leverage is a double-edged sword. As a financial tool, you can think of leverage as a multiplication sign in mathematics. Its ultimate goal is to amplify your investment results. This is the magic of leverage. Using leverage may allow ordinary investors to achieve a comeback.

For example, on the exchange platform, there are 1-100 times leverage options. If an investor wants to invest 1 million yuan in a product, he or she has to invest 1 million yuan without leverage. If 100 times leverage is used, only 10,000 yuan is needed to buy 1 million yuan of investment. When the investment target increases by 1%, the profit is 1%X100=10,000 yuan. Of course, the risk will also be magnified 100 times. In fact, leverage is not a scourge. If it is mastered well, it can be used for my own benefit.

When we invest, we only invest in high-probability events. When you think the trend is likely to be within your prediction, using leverage can not only help you preserve and increase your value, but also leverage huge wealth. Humans need leverage, the world needs leverage, the economy needs leverage, and the counterattack of losers needs leverage. Leverage is a means, an adventure, and a vision. The same is true in life. You should take more risks and do more "big things". If you are only worth 10,000 yuan, you should act as if you are worth 1 million yuan. Under high risks, you should use high-standard behavioral standards to demand yourself, use the idea of ​​being prepared for danger in times of peace to stimulate your potential, and experience a leveraged life of small gains and big gains.

Position Management

Investing is not that mysterious. As the saying goes, the simplest way is the best. The only correct way to make a profit from investing is to buy low and sell high, but most people always do it the wrong way. Position management also requires knowledge.

Among the top ten ways to die in the cryptocurrency circle, all-in is the first, and chasing highs is the second. So we should intervene in batches and try not to all-in at once. The reason for intervening in batches is that no one can accurately guess the lowest point of the market, but we can grasp the bottom area. Buying in batches can effectively smooth out market fluctuations and spread the purchase cost.

For example, when the market is good, some people attack very hard, but when the market weakens slightly, they retreat quickly. How to avoid a large retreat? I think it is necessary to do a good job of reasonable position management. When trading cryptocurrencies, you should not be fully invested and adjust your positions dynamically. The speed of making money does not depend on your principal, but on your real skills.

Long-term investment

Investment is generally divided into short-term investment and long-term investment. Long-term investment mainly invests in mainstream currencies and value currencies, ignoring the rise and fall of currency prices and obtaining value through long-term holding; while short-term investment is to speculate on waves, and you need to set a stop loss and take profit position for yourself.

Behavioral economics has proven that frequent trading is wrong. I believe that those who have invested have experienced this. How many people have made money in the currency market in the past two weeks? Therefore, long-term investment is very necessary. In this investment model, you have no opponent, your opponent is only time. Writers all hope that their words can beat time, and so do long-term investors. The key is to persist, ignore the noise around you, don't accept the noise of the market, and only have the finish line in mind. That's all.

Choosing long-term means giving up short-term, which may reduce passion and bring more steadiness. In fact, short-term investors are like fence-sitters, leaning to the direction the wind blows. However, they do not gain much benefit in each bull market. On the contrary, long-term investors who insist on value growth, with their extraordinary patience and strong willpower, constantly refresh the height of their life wealth in each bull market.

Investing is a marathon. The key to winning is not the momentary transcendence, but the persistence along the way. Try to choose mainstream coins and value coins, and stay away from junk coins and air coins. Only those who can endure loneliness can maintain prosperity. I hope everyone can reach the end in the end.

postscript

The essence of investment is largely inseparable from these five principles. Sun Tzu said that a country's long-term victory requires "Tao, Heaven, Earth, General, and Law". Similarly, the success of currency market investment also follows "Tao, Heaven, Earth, General, and Law", the so-called ultimate way of currency market investment.

The "Tao" of digital currency, or the value of its existence, is based on consensus! On the basis of this consensus, people who participate in the creation of digital wealth in the era of digital currency will not be so entangled and hesitant. With the development of the digital industry, the imagination space of this world is unlimited.