Do You Know Your Magic Number for Investing?

3년 전

Bitcoin and other cryptocurrencies have had a bad couple of days recently and as a result, many people have significant losses in their portfolio. One lesson I will always share for every crash is to LIMIT YOUR POSITION SIZES to amounts that are suitable for your level of risk tolerance. Believe it or not, I'd argue one of the biggest reasons financial advisors even have jobs is because people suck so much at identifying their own levels of risk tolerance and abiding by it.

If you are glued to the screen all the time watching the charts, or if you're losing sleep over Bitcoin's / altcoins' fall, then it's time to trim your position sizes to a level where you can make healthy decisions and continue to live comfortably. For some investors / traders, it takes more crashes than others to finally learn this lesson. However, you don't get too many chances in a volatile market in this one so try and figure it out as soon as you can.

In terms of trading, I've decided to pick up some Vechain (VEN) at close to 39k Satoshi flat. This is a short-term trade: I am looking to exit March 16th (or so - depends on if it pumps) before the pre-deadline selloff for the X series nodes.

These nodes encourage investors to hold more VEN, so I am hoping for a pump prior to the deadline to sell into. This is a risky trade as it is possible this is already priced in and that VEN sells off even sooner before than the deadline than I plan to sell. I am not going "big" on this trade, just want to test the waters with catalyst based trading (akin to earnings trading in stocks).

Some updates: I haven't bought Monero yet and don't plan to unless it goes below 2.5m Satoshi (perhaps it will sell off after the hard fork). I still continue to hold Cardano, but won't buy anymore for a long time (lower 1k Satoshi range). Bitcoin is trading close to its 200-day moving average, so should be interesting to see if that holds up as support. I won't be adding any more since I fully allocated at $8.3k during the last crash.

Hope you all enjoyed as usual - Thank you for watching / reading!

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Thanks for the post. Those who invest in bitcoin have to deal with a very difficult asset to valuate. What is it worth? When it starts to drop, where will it stop? Is it all just investing into narrative? With stocks at least you have metrics such as pe, ps, book value etc that are used to at give some idea of the fundamental value, a floor, once a stock start to drop. But the fact that so much energy, resources are used to mine a bitcoin and it's just going to get harder is in a way builds the value in itself for bitcoin even hype is no longer there. Seems like bitcoin can't just one day be considered worthless after all this effort (and the effort is huge). So it seems to me we know at least there's some floor on the price. I want to ask the community if anyone came across a chart that shows the price of bitcoin vs. the energy usage to mine a single bitcoin. Actually per cost of energy is even better metric since means of electricity production is also a vary such as coal, renewable etc..(although this will vary greatly from country to country unless we do weighted average off all countries based on amount of bitcoins mined)

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I spent a little bit of time and ploted this data manually on monthly time frame. First chart shows the bitcoin PE (price per energy) ratio for the past year. The second chart is price projection based on average PE ratio of 184 and energy usage estimates from link below. I've deleted the two highest PE points on dec 10 2017 and jan 10 2018 that were way outside of cluster . I'm not sure really if there's any meaning in this chart however i'll keep track of this statistic in future to see how close or off it'll be. Source for energy usage and energy usage projection: https://digiconomist.net/bitcoin-energy-consumption

analysis.JPG

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Welcome to Steemit, I'm here to give you a vote on your very first comment! Great job engaging with the community!

Somehow I spent a lot of effort telling people to sell and take profits in December, but I didn't follow my own advice closely enough, and I realised that I was in over my head according to my risk tolerance. So definitely, it's a lesson worth repeating over and over as you said.

It's cool to have investments in other markets, where 1% is considered a big move. Even a stockmarket crash of 20% seems pretty tame in comparison to what we stomach in crypto.

Thanks for posting.

I think your strategy in the case of VeChain is ill-advised, and here's why: if there is a pump prior to the March 20 snapshot, it is because of people trying to achieve (X) Node status. However, as the VeChain rules state, if afterwards your balance dips below the required amount, you lose this status immediately (and, in the case of an X Node, forever). Therefore, it makes no sense to buy more VeChain only to sell it right after you have achieved the Node status. Especially since this is a one time opportunity in the case of the X nodes.

There might be some people like you, trading on this thesis, that make this scenario play out anyway though. But in my opinion so far the VeChain team have been VERY professional, and I am convinced they deliberately structured this program this way as to avoid a pump and dump happening.

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Welcome to Steemit, I'm here to give you a vote on your very first comment! Great job engaging with the community!

  ·  3년 전

Thanks for great videos....Can you also make a video on Why Bitcoin Cash & Ethereum Classic are real Bitcoin & Ethereum?

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I don't see that as true for Bitcoin Cash for a number of reasons that I've discussed numerous times, but will likely make a video on separately in the future. I understand preferring it, but think it will ultimately cost you every penny you have in it so do at your own risk. For Ethereum Classic, I think the argument is much stronger for it being the "real" Ethereum given immutability is often cited as an all-powerful feature of utilizing blockchain technology, so the current Ethereum made a very real sacrifice. However, I have concerns over its longer-term adoption so I wouldn't personally invest in it.

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Personally I've been liquidating my ETH into BTC and 3rd/4th gen blockchains. I like ETH and Vitalik but it just doesn't make sense that ETH has a market cap that dwarfs that of the 3rd/4th gen blockchains.

Many of these other blockchains (NEO, EOS) allow more flexible programming languages than Solidity. Plus some of these next-gen chains have raised huge warchests to incentive devs to build on their platform.

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  ·  3년 전

@cryptovestor Thanks for the feedback...I recently started a thorough investigation on BTC vs BCH...Still, can't say for sure which one is "real". There are several references that I found them interesting so I'm sharing at the bottom.

Regarding ETH vs ETC I think what the Ethereum Foundation (EF) did was what every centralized government does.

In Ethereum website it says:

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference....

[UNTIL something goes wrong that impacts the interest of EF] I would add this to their site.

What they did in 2016 was basically "bailing out" DAO project/investors!! This is antithesis of what the whole Bitcoin /blockchain was invented.....Are they gonna "fork" it again next time some attacks happen? Just for this simple ideological reason for me the whole thing is voided.

the whole reason of crypto is that it subsidizes itself INDEPENDENT from any outside sources, the moment a company or VC or special interests grants some funding to a crypto its OVER as a decentralized cooperative ecosystem....also the only thing you hear in ETH is Vitalik this or Vitalik that...what if he goes under the bus tomorrow?! EF is like a new central banking!

https://www.wsj.com/articles/bitcoin-startup-blockstream-raises-55-million-in-funding-round-1454518655
https://medium.com/@jonaldfyookball/mathematical-proof-that-the-lightning-network-cannot-be-a-decentralized-bitcoin-scaling-solution-1b8147650800
https://medium.com/@johnblocke/a-brief-and-incomplete-history-of-censorship-in-r-bitcoin-c85a290fe43
https://medium.com/@octskyward/replace-by-fee-43edd9a1dd6d
https://medium.com/@john.s.millibit/bitcoin-through-the-looking-glass-cb1a96cfb494
https://medium.com/@ViaBTC/why-we-dont-support-segwit-91d44475cc18
https://news.bitcoin.com/should-we-fix-malleability-in-bitcoin-and-bitcoin-cash-if-so-how-and-when/
https://medium.com/the-publius-letters/segregated-witness-a-fork-too-far-87d6e57a4179
https://steemit.com/bitcoin/@modprobe/i-looked-into-segwit-and-here-s-what-i-saw
https://coingeek.com/risks-segregated-witness-opening-door-mining-cartels-undermine-bitcoin-network/
https://lightning.network/lightning-network-paper.pdf

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Yeah, I held 1 bitcoin and 40 eth and bailed after the DAO hack at a 20% profit in a week. Obviously wish I had held on but it really shook my confidence. Also that was my 2nd time dealing with crypto-assets (I saw it back in 2013 and called it a scam. Also got a 1000 XRP airdrop that I promptly cashed out for a bottle of Laguvulin 16 which I don't regret).

Still think BTC will go up but that ETH is overvalued at $70 bln as the 3rd/4th gen blockchains overtake it. There's just no good reason with the SEC hammer coming down on ICO's (mostly ETH) to have it valued at 10x the nearest blockchain.

NEO will evade this because it's not based in the U.S. EOS gets around this by bankrolling devs with their $1 billion warchest and distributing airdrops rather than ICO's.

Welcome to crypto-land and happy hunting.

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My real concern for BCH is once regulation comes into the space I fear BCH will get shutdown or at the very least lose a lot of value. Roger Ver has gone on CNBC saying he has no problem with insider trading when questioned about the Coinbase mess. There were suspicious pump and dumps of BCH a few months back that just didn't make any sense etc. Regardless of where you stand in the debate, the reality will be very real if these things are proven true. It's downfall will surely not be about the technology, but more likely a result of business practices.

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  ·  3년 전

Roger Ver is not BCH!

Exactly. I've personally found the oft spouted advice of "only invest in what you're comfortable losing" key. Everyone's freaking out so far this year, but I've only put x% towards crypto and if it's gone, it's gone. I treat it like a trip to Vegas or a family outing to Disneyland. Do I believe the whole cryptospace will crash to zero? Not at all, but it definitely helps psychologically in these dip times to assume total (or near total) loss. Treat it as a hobby or some super expensive frustrating toy you picked up and leave it at that. What good are eventual gains if you can't enjoy them in the end because you've given yourself a coronary along the way?

When I see people on here or YouTube promoting allocating 100% of investing into crypto, I want to scream. I find that advice highly irresponsible. Nothing against crypto, I'd be screaming against 100% allocation in anything. But as soon as you mention any kind of temperance with crypto, you're spreading FUD...

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Most people are fairly clueless of the risk they're taking on, so it's kind of disappointing to see - The volatility should teach people very quickly though, at least the ones who are capable of learning.

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That’s great until the amount you risk turned into an amount you’re unwilling to risk. If I invested 5k and was willing to see it go to zero but it turned into 50k, yeah I would be freaking out if it turned back down to 25k.

And like grant card one says go big or go home. I want life changing amounts of money.im not investing just to get by more. I’m investing so my kids and I are thriving. If I have to sweat it out a bit for them so be it. But that is just me. Not everyone should do the same.

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Haha I think most people have the same thought pattern though

This is how most crypto investors imagine themselves on Binance ,Bittrex, Kucoin.
XhOedKB.gif

While in reality...it's most likely this.
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All joking aside..
Now mind you im down big as well on a few coins.
(DRGN - 46%/ADA -33%/QSP -35% and my worst AST -75%)

So don't think im gloating or anything folks.
With this market & the stock market ,ive learned a few things last few years....here's a couple to keep in mind.

  • Never buy without researching the project totally. Doesn't matter who gives you the information...research it yourself.

-If a project looks too good to be true,it likely is. Too much hype not enough product in this market.
-Buy Red & Sell on Green....
this is true on the stock market as well.
If a certain project/token/coin drops for uncertain reasons (or a tweet)...that can give you a slight opportunity for a better entry point in said investment.(Think EOS or NEO)
Doesn't mean every single one that drops is great (BCC) ...but keep a watch list ready for those who's price might too high for an entry point and yes be patient.

-Risk tolerance-
You must know your own risk tolerance in this market or any other. Meaning you gotta know how much pain you can take seeing an investment/coin/stock drop....severely.
(ex: AST is a risky investment but i look at this one as a gamble. I can deal with it dropping to -99%)

-Budget yourself.
Yes create a budget for yourself,if you're suddenly pouring fiat with reckless abandon...realize you're going to lose that bet badly. Don't use your mortgage money but your Starbuck's money to invest in crypto.
If you eat fast food everyday at lunch...bag your lunch...use that small saving to invest.
Taking out 20k loans or 2nd mortgages to invest in this volatile market...isn't smart at all. And it's gotten tougher to file for bankruptcy than before..so don't think that will save you.
If the markets really crazy and you aren't sure what to do.

Stop.

Put away your phone...shut off your computer..

take a deep breath,read up on investments you like or just enjoy life.

Volatile markets can not only take a toll on you but your loved ones as well...
I created a small budget for it,and i make a decent salary...to me it's money id be gambling in Vegas every year.

  • Create an entry & exit strategy for each investment you make. I did that with XRP...bought in at .18...sold at 2.85. I watched news/coinbase rumors...carry it up the charts...and then dumped it all. Learn to use Stop/loss on Binance or whatever exchange you use.
    -Stop listening to people shilling on Twitter/YouTube/Instagram/FB...whatever.
    Alot of YTers are paid to shill certain coins/ICOs. Some if you listen to them don't have a clue on what the hell they are talking about.
    "I dont really know the technical stuff on alot of alts...but i like this coin."
    Think about what this person said. And tell me that's a good investment.
    Mind you i watch a few and love their content (Cryptoinvestor,Coin mastery,Boxmining,Bitraged,David Hay and a few others)
    Notice the guys i mentioned....dont shill. I like them for their content.
    Crypto Twitter i believe is even worse with guys creating Paetrons to shill certain coins...there's one guy whose followers have started to slowly turn on him on Twitter because his shitty picks.
    Or the 'cool'guy who shilled alts...until he got called out after he blurbed that he sold almost all his alts after the last run up.
    Or unrealistic chart guys....i can go on & on about Crypto Twitter.

-If you see something shooting up for no reason. ...don't join in that P&D.
because most likely you'll be left holding the bag at the end of the day (ex: PaCoin -JR Business...those kids shilled it...pumped it then dumped it all.)

-Be honest to yourself...If you aren't cut out for it.
You're just not.

This is now a speculators market....so yeah cryptovestor

This is all a gamble..so treat it as such folks.

Great video as always @cryptovestor

Care to do a brief post on your portfolio? I'm guessing it changes frequently, but maybe the main players you are interested in. I like your VET idea

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I'll be revealing some of the few altcoins I've bullish on for the relatively long-term soon, so will basically reveal the largest positions in my portfolio at that point. I've already revealed Bitcoin & Monero to be the largest positions, and Bitcoin is a very significant portion given my preparation for a Bitcoin cycle.

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I posted mine during my early days ...

A problem that some people have is that they think they have put in as much money as they are willing to lose into the market, then when things like this happen they freak out and take out their positions at the lows.

Markets are scary and when it goes against you that fear is realized.

Have rules, know yourself, and take profits where you can. As you have said in previous videos, losses hurt twice as much as wins.

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Indeed - which is part of why most people don't learn until the market crashes. You just have to hope for them to be quick learners.

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Cryptovestor, don't know how many bubbles you've lived though.

I caught the tail end of the first dot-com bubble, the minor solar bubble (small profits but w/ small position size), China bubble (gained a lot, lost a lot, and ended up slightly up in the end), and finally saw the insane speculation around the housing bubble (made money shorting on the way down with my 10% short portfolio position although I was 50% net long and slowly laddering in during the downturn).

I've thought that bitcoin was down for the count 2 times previously. Any good bubble will inflate 6 or 7 times before completely collapsing.

Everyone needs to sell on the way down so that they can buy at a higher price as it blasts higher. Eventually people get taught to buy every single dip.

Which, naturally, will be when the bottom falls out.

I know that your longest time predition for Bitcoin is that IT IS A BUBBLE!

So, even thought we might get some fresh blood, the interest of the general public HAS gone down.
What I'm trying to say is: now and even more into the future, the market will have less and less dummies and more people that either:

  • Know the fundamentals
  • Know how to trade

OF COUSE there will always be people who lose money and give up (that's the only way that anyone can Make money) but the market will get more mature and cautious and less driven by Twits and Hype.
That, I think, will lead to a slower market, and in for the next couple of days and weeks I think that the efects of less 'get rich quick' people are going to start to impact the markets down to (BTC) 7k or maybe even 6k

(If you have a different opinion, I would be glad if you shared it!)

I HODL “and” trade. My trading amount is about 10k. My HODL amount is bloody massive (got into this in 2015).
I’m not touching this chart. Lost 2k listening to TA people. Lots of excitement and fun but some guy just dumping bitcoin right now.
If we drop below 6k I might buy some but maybe not.
I believe in the fundamentals. Cryptocurrency is the future.

Hey Rudy, I’ll swap yer 1 Monero for equivalent Cardano. Let me know.

Great approach and advise! Discipline is an important trait to maintain in times like these. Stick with your strategy if it remains sound and aligned with your risk appetite. Agree with comments that if you feel glued to the charts, you may have too much skin in the game. These assets are speculative as should only be a portion of an investors allocated capital.

Do you know how much, quantitatively, a dump like we saw with Mt Gox (~35,000btc) would impact the market? I believe it's not a straight 1:1 impact on market cap when a massive buy or sell order rolls in, right?

Also, we can monitor the status of Mt Gox wallets here:
http://gaelb.alwaysdata.net/MTgox_watch_CW/index.html
You can subscribe to be notified whenever coins are moved in/out from them.

Keep up the great work!

Keeping calm and adopting a "Mr Spock" mindset is probably the right way forward right now but it is easier said than done. The hardest part of trading / investing anything especially volatile cryptos is dealing with your emotions. I think in the current market you either have to reduce your exposure until the uptrend resumes or just HODL it out.

How do you recommend becoming a successful investor? I imagine getting into crypto is other's first dip into investing as it's mine as you have mention in previous videos. I have no idea what I'm doing. I'm trying to learn as I go but my position size is a bit high. I sweat little bit during the crashes but at least I was smart enough to stop here. Any chance you can point me and others where to look/read/watch for learning investing. I've been just reading and watching random wikis and videos but I feel like I'm not learning effectively.

In the video you mention something about the problems of NEO. Is there a post where you elaborate on that? Found out about your channel only a week ago, great videos!

aye! Lets do this! Bitcoin 4k!

Awesome video. Appreciate your insight on VEN.

Also, my guess is that this will prove to be a buying opportunity for BTC as the Mt. Gox trustee only needs to sell $87 million more of BTC to hit his $487 mln fiat target to "repay all claimants in full."

I've posted more details on my Steemit blog
https://steemit.com/bitcoin/@lordprime/becoming-more-bullish-on-crypto-doubt-there-will-be-much-more-selling-from-the-mt-gox-trustee

I think the following story does well as an example to illustrate your point about personal risk tolerance.

How I lost $100,000 in Bitcoin, Litecoin, & Ethereum - Lessons Learned

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Agreed. Good vid.

Bitcoin is kinda indecisive, $9300 now, $8500 yesterday, $9300 before that, and $8500 before that. Is bitcoin going to $4000 or $40,000? :)

  ·  3년 전

Sounds like a good game plan for VChain - also reasonable position sizes ... having planned ahead ADA cost me 60$ (pulled out before it would've been 300$ or more). Been trading only BTC/LTC since mid Feb ... its literally gambling, all the TA and fancy Elliot Waves, Stop Losses can't do much but minimize risk and maximize probability for gains. As for the Mt Gox trustee, he was probably notified today ... its like the 3rd time in a row ~ 16 UTC/17 GMT where massive sell-offs occurred. This time around only in bursts 2 big ones and inside multiple smaller ones in the middle. (at least thats my assumption) Very disturbing ... knowing theres officially ~ 180.000 BTC to be sold off ... which leaves me guessing its unofficially a whole lot more.

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Don't think so on the Mt. Gox trustee. He only needs to sell $87 million more to hit is repayment goal of $487 million.

I'll limit my position for sure... as soon as it reaches ATHs! =D

My magic number? 69!

Hello sir, I just wanted to say that I've been watching your videos for a few months now and I really enjoy your take on the markets. I feel as if you have a bit of a contrarian approach, but I feel like I side with you on most matters. As for today, I really get what you mean by that magic number. I kind of go back and forth with that one though. Sometimes I stare at the charts and other days, I say "screw it," and put everything that I don't need for my bills and wait. I am stubborn as hell about selling at a loss. I almost would be willing to let it die before I sell lower than a profit. I'm not sure if that's a good thing or a bad thing, but either way, Thanks for the videos. I just finally got around to following you on Steemit. I'll catch you around!

Could you make a video on your fundamental trading techniques? I see that you are a seasoned investor not only in the Crypto-sphere and I believe there is much to learn from you! Thanks for another great video :)

I have my 7 rules - it is older than 7 days and if there is interest, I'll expand on it.
All the best!

You can take his advice from another side. Invest small amount you know you can just throw away and see your reaction during next >50% dip. This shouldn't be a long wait in such fast moving market. If you were fine, gradually increase your amount.

hand-grass-money-cash-currency-dollar-bill-668948-pxhere.com.jpg

CV,

Great content.

I have been reposting..
Some of the best on YTube.
Also.. Your channel art.. is original and Fantastic.
Can you share anything about how its created?

Thank you for your time and efforts.

MV

your posts are great sir, I've been following you on youtube for a couple of months and just got my steem account, keep with this great work!

I am still waiting for it to hit $1000. again it just feels like it wants to go there before it really heads back to the 19- 20 thousand mark. I am playing with altcoins in the meantime I have salt, neo, and navcoin for now. I want to get some DigixDAO when I get a chance. Great post keep it up....😁👍👍👍👍👍👏👏👏👏👏👏

"Sell down to the sleeping point" - Jesse Livermore

I totally agree with you. I still can't understand knowing how volatile this market is, people still invest amounts they are not willing to risk and lose

Look at what time of day the crashes all start...around noon give or take an hour. The last several days in a row there have been large dumps right around noon...That is NOT random. Take HEED.

In this video you mentioned that you do NOT like NEO. Can you please tell us, your loyal subjects, WHY you think there are issues with NEO? What problems can you see already that we can't?
(PS they are planning to go fully decentralized in the future, so I hope that ain't one of your main reasons)

Keep up the great work!

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I know I've found my magic numer as I'm happy to see half my net worth vanish in 6 weeks just because I get to buy some "cheap coins".

A usual your channel provides much needed sobriety to the crypto space.

thx 4 the upvote!

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What happened with cryptovestor?

I will tell you what burns my muffins. I want BTC to go down a bit more, or even to invest in other altcoins, but I want to do it with what I can make from Steemit. Unfortunately, everything seems to be tied directly to BTC. If BTC drops, everything drops. Will any of these altcoins every stand completely on their own?

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I think eventually a few will eventually stand out on their own....but it will take quite a bit of time.
Since this is a new market, look upon that first tier of Alt Coins (ETH/BCH/LTC/NEO)to see if any can surpass BTC.

As of now,No.

Each has its specific issues which will hold it back for doing so.