Kenny's Approach To (Crypto) Investing - Dollar-Cost-Averaging, Diversification, and Strategic Exiting

Dollar Cost Averaging

Pretty simple: If you can buy something while it is on sale (at a lower price), then you can lower your average cost, and thus the price you need it to hit in order to break even, and cross into gains. Let's do a quick example. You start off trading 100 FRNs into a crypto valued at $10.

10 Coins at $10 each

Now the price drops on the market to $5. Your 10 coins are only worth $50.

What do you do? Do you sell?

The only time the answer is yes is if you feel like the coin you invested in has peaked, is a failed project, bankrupt, etc. If you still believe that it has value, the response is to BUY MORE while it's on sale.

Buy 20 more at $5 each - now invested $200 for 30 coins (average price $6.67)

The price drops even further, down to $2. If you the fundamentals, tech, and such still look good, you buy more.

Buy 100 more at $2 each - now invested $400 for 130 coins (average price $3.08)

Now when that price goes back to $5, you're already up $1.92 PER COIN on your now 130 coins ($250 profit)

Or you could have sold along the way, and locked in a loss.

Or you could have just held the ones you bought at $10... and now months later you're still sitting at a huge loss on them.

Diversification

This one is very simple. By holding multiple assets (coins in this case) you can spread out your risk, as well as your gains. This is especially helpful when getting a variety of coins in the same area (for example buying 4-5 different privacy coins, or the top few Smart Contract coins)

If you held all in on FunFair over the last 3 months, you would have seen roughly 11x growth
If it had been all Bitcoin: 3x growth
All in on Ripple: about 70% growth
All in on Zilliqa: About 6x growth

Now what if you held all three of them, split your portfolio between them? Let's say you bought them exactly 3 months ago, for the sake of looking at the charts.

Strategic Exiting

Now, what if on December 29th, when XRP bottomed out at $0.19 you swapped one quarter of your Zilliqa (up around 4-5x what you paid for it) over into XRP?

That means that your ZIL is now all-profit, since you pulled out as much or more $ value than you put in originally, and still have 3/4 the number of coins you started with.

And your DCA on Ripple has gone down from $0.30 to $0.25... meaning that by the time you get back to today: over 100% growth on Ripple as well.

If you notice that one of your coins is WAY up, and another one is way down, or even just drastically slower growing than the rest, then ask yourself: Is this no longer as strong of a prospect? Or is it just on sale?

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