FOMO is Not Part of my Crypto Strategy
I am revisiting something I wrote a long time ago for my Facebook group when I noticed people kept chasing the latest big thing pumping coin. A number of the emails I have received has asked me about specific coins and whether it is the right time to invest and invariably they are coin which is making big moves.
I may sound like a broken record with my repeated warnings on timing your investments but they are important, and I will continue to do them. Losing money you can't afford feels crap. I lost £20k margin trading tech stocks a few years ago; it was horrid, I do not wish this on anyone.
I write this blog to share my reasons for investing and help people avoid making expensive mistakes. Crypto markets present a great opportunity, but it is important to understand why it is imperative to have a strategically cautious approach.
I want to ensure that when any of you do start investing, you are clear on why you are doing this and whether you are investing or gambling.
It is easy to get carried away in a casino after a big win and lose everything. Crypto investments are the same. When the marketing is going crazy, and coins are seeing triple digit growth in a short amount of time it is easy to think of this is standard, try and find which coin is next, which you missed out on and so on.
A sensible strategy is not about chasing these big jumps as they can easily lead to silly mistakes and significant losses. Also, there are periods of stagnation or decline, if you are caught in a bad trade and have not hedged the market you can be caught holding the bag on a downward trajectory.
You do not want this.
A wise strategy is about sensible investments and if one of these has a pump then treat is as a bonus. An unwise strategy is looking for a quick buck.
I know I keep going on about being careful, but this is important. I do not want anyone to make a silly investment, lose a bunch of money and feel shit.
As such, here is a reminder:
- Any crypto portfolio should be considered as a long term investment to allow you to ride out the different volatile waves.
- There is a significant potential you may not make a profit and can even lose money.
You need to ensure that you invest in good coins, with a good team, good roadmap and thus a good upwards potential, but you also need to ensure you are picking the right time to enter an investment.
As such, I am hedging the majority of my investment in solid coins with a solid market cap. I am treating any quick pump as a bonus, and I am not worried about exiting a coin if I think it has pumped too high.
FOMO is not part of my strategy.
If I miss a pump then I miss it, it is gone, and I look for the next opportunity, and there are plenty in Crypto.
I do make a few, minimal speculative investments in coins with a low market cap and high potential. But note that, these are speculative investments, thus risky and form a tiny part of my overall portfolio. Always less than 10%, as such if they pump then the returns can be significant and if they fail then they do limit to no damage to my overall portfolio.
Steller, DigiByte, and Bitshares were all excellent examples of this. Specifically, with Steller, I wish I had put £10k in when I first invested; I would have made over £100k. I didn't because that would be a stupid investment. I invested £250 as a low-risk percentage of my portfolio, with a good upside potential.
As I have said before, the strategy is that I believe in the blockchain and the growth of the market cap of the entire market. As the market grows then so does my investment.
I have limited exposure to the crash of a particular coin, only the market. This is an investment strategy I am happy with because the market does crash at times but has always, in 8 years, retraced to new highs. The total market cap is now over $150bn, and it was $38.2bn when I started blogging.
Therefore, if you are watching the markets always wondering where to move your money and sticking a large percentage of your portfolio on a small coin you are taking risks, gambling. A strategy I do not support in any way. If you are successful then good for you, if you lose money then I am sorry, but I just can't agree with it.
Please be careful, do not get over excited and do not make silly investments for a quick buck.
Make sure you are a trader and not a gambler