Risk Management and a Balanced Portfolio

It's always a good idea to keep a balanced portfolio for any long term holds. This helps reduce risk and can also help me to further build my portfolio. By spreading out my crypto holdings I hedge with multiple coins reducing risks of serious losses hoping that all coins wont show losses at the exact same time, and counting on a couple nice gainers too.

Here's a simple example. I take my top 4 coins in my portfolio. Each of them represent an equal investment of BTC.

Example

OK OKcash ----- BTC .25000000
LTC Litecoin -- BTC .25000000
XRP Riplle ---- BTC .25000000
XLM Stellar --- BTC .25000000

This can be done with any number of coins. So I now have 4 strong bags of crypto that I'm fairly confident in, Just like the old saying goes, "Don't put all your eggs in one basket", this holds true for crypto.

By splitting up my investment in multiple coins I've basically hedged my bet, somewhat reducing risk of all 4 of them dropping in value. Although alts falling together happens often in crypto, they will probably fall at different rates, and hopefully one or two of them will balance out with gains.

Now lets keep this balanced. We have our 4 bags OKcash doubles Litecoin sees a small gain, Ripple a small loss & Stellar holds it own staying pretty close to your entry price. My portfolio now looks like this.

OK OKcash ----- BTC .50000000
LTC Litecoin -- BTC .30000000
XRP Ripple ---- BTC .20000000
XLM Stellar --- BTC .25098340

I have several options here, but lets look at OKcash first. I doubled my money, I could hold, but the price could go back down, some black swan event could occur and the bottom could fall out. It's crypto anything could happen. Lets balance this a bit.

So I made a quarter bitcoin off OKcash esentially doubling my money. At this point I want to balance this a little more. I sell half my OKcash and now have .2500000 of BTC available. My new portfolio looks like this.

OK OKcash ----- BTC .25000000
LTC Litecoin -- BTC .30000000
XRP Ripple ---- BTC .20000000
XLM Stellar --- BTC .25098340
BTC Bitcoin --- BTC .25000000

Now I have to decide, do I buy more Ripple, Hodl what I have or cut my losses and sell. I say to myself Ripple is prety strong, I think it will come back I think I'll add more to my portfolio and sell .05000000 of my LTC and use that for more Ripple. Now my portfolio looks like this:

OK OKcash ----- BTC .25000000
LTC Litecoin -- BTC .25000000
XRP Ripple ---- BTC .25000000
XLM Stellar --- BTC .25098340
BTC Bitcoin --- BTC .25000000

At this point I could spread my BTC out among the 4 alts, or if there's a couple new bags I'd like to build I can find two more coins I like. If I don't like anthing at the time I can just hodl the BTC and wait for a good opportunity.

So lets say I like the price of Viacoin and Syscoin. I've been watching them for awhile I like the price they're both good stable projects with hard working devs and interesting technology. I'm going to buy those. I take my BTC and buy .12500000 Syscoin and .12500000 Viacoin. Now my portfolio looks like this:

OK OKcash ----- BTC .25000000
LTC Litecoin -- BTC .25000000
XRP Ripple ---- BTC .25000000
XLM Stellar --- BTC .25098340
VIA Viasoin --- BTC .12500000
SYS Syscoin --- BTC .12500000

I've now balanced my portfolio, added to my holdings, and practiced good risk management. At this point I watch all projects closely. In the future I'll keep the projects that are developing strongly and showing potential, and lose or sell the projects that head in a different direction or aren't working out the way I had planned.

And that's one of the several ways The Dood handles risk management, and keeps his portfolio balanced.

Not meant as financial advice. Seek a duly licensed financial advisor for financial advice, not some jackass on the internet who calls himself The Dood. All information here is posted as opinion, and meant solely for entertainment and conversation purposes. Coins mentioned are not meant as endorsements, and were simply used as examples and references.