You can manage risk!

Do you "put all your eggs in 1 basket?"

It's true, everyone can stand to learn a thing or two on how to manage the risk in their life.

Sometimes our emotions get the better of us and we make impulsive decisions. Sometimes we benefit and that is great! But sometimes our impulses cause consequences we don't like!

By mitigating or managing risk, you can dilute the consequences, good or bad, of the outcome of an investment, be it a time investment like volunteering of financial like buying a stock.

Here we will use crypto investing as example.

Recently, a friend of mine invested into an ICO which exit scammed. There were no verified facts which he found to prove it was a scam, until it was, and sadly that is a reality to some investments.

See our post on red flags if you're interested in what makes an investment sketchy:

https://steemit.com/cloudconnect/@cloudconnect/trade-at-your-own-risk-bitconnect-and-red-flags

So how do you manage risk?

This will read like a scored evaluation.
I will list some scenarios and add to the end of statements with:

(w), to signify the end of a scenario resulting in a win,
(L), ... a loss,
(?), to signify an unknown risk),
(+), to signify adding risk, and
(-) to signify neutral or decreasing risk.

(Based on the idea that not taking more risk is decreasing your risk via opportunity cost of adding risk). More choices add more variables, which add more potential for number of outcomes.

Notes: I am about to give a very simplified example with general placeholder names. I will not hash out every possible infinite pedantic-ass bullshit. Take the concept and compute with own imagination, you monkey-shaped, bio-computer. (With love, tongue in cheek). The form you cash out in also has some risk. That value won't be discussed here for simplicity.

Let's say you have $1000 you want to invest in crypto.

Scenario 1:

You have a lot of confidence in AAACoin.

You acknowledge that there are probably some better coins and projects to invest in, but you don't want to research the thousands of coins out there and possibly projects that are just coming out.

AAACoin is established in your opinion and a good investment.

Action: you invest $1000 into AAACoin and wait. (?)

Possible Results:
1. AAACoin does really well in whatever timescale you're investing. Great Job. (w)
2. AAACoin is flat so long that you stop wanting to wait for your return, you either:
i. Sell at a loss, and you try to recoup your loss on another project IF you play your cards right (+)
ii. Sell at a profit, Nice... maybe it wasn't a 1000%, but you didn't lose. (w)
iii. Do nothing (-)
3. AAACoin "crashes" and you get worried you'll never be able to sell at a gain. (?)
i. Sell at a loss, and you try to recoup your loss on another project IF you play your cards right (+)
ii. Sell at a profit, Nice... maybe it wasn't a 1000%, but you didn't lose. (w)
iii. Do nothing (-)

Now, the lowered risk on doing nothing is based on the assumption that the coin has value. If the coin does not have a real value, you are increasing risk. The outcome could always be that AAACoin fails and you lose everything.

In that case, you did increase risk, but may not have been able to tell.

You may not be able to find out higher order risks, which depend on a number of variables, until the "big event" happens (catastrophe or celebration).

What you can do, is put your eggs in multiple baskets OF DIFFERENT KIND

Scenario 2

You have $1000

You believe in 4 projects. Each has hands in a different "industry," but they do have some competition between them as a favored payment coin, but for different reasons.

AAACoin- traditional markets favorite
BCoin
ANT(a network token)
UC (undervaluedCoin)

You aren't investing a whole lot of money. Life changing rewards comes with a coin which you got a high number of at a very low price, and it increased to a value orders of magnitude higher.

Otherwise you could put massive funds into every good, legitimate project.

AAACoin is expensive and the traditional favorite, but has a great looking future still. It seems like the instrument/vehicle with which everyone bases value of many other coins.

BCoin looks like a coin to take a favored poistion in the cryptosphere in total market cap.

ANT has a vastly different structure to the other coins, and it can handle high volumes of traffic.

UC is worth <$0.10 and may reach mainstream adoption. Could easily be between $1-100 with mainstream market caps.

One possible strategy is as follows:

34% AAACoin
18% BCoin
22% ANT
26% UC

Compare to Scenario 1:

100% AAACoin.

This is the whole concept of decentralization. Everything in reality is on sliding scales of a parameter/variable except for constants ahahah and many of those are assumed constants for the sake of proper mathematical evaluations. (Step-wise testing of single variables before multi-variable testing).

You decentralize your risk with Scenario 2 (-), and you increase your risk with Scenario 1 (+).

This article is not supposed to even be relevant to the question, "how do I win or lose?"

Markets, Trading, Finances, and Economics are spheres of awareness

which are within the idea of decentralization/managing risk. They are conceptually influenced by the concept of managing risk.

Take the entrance of a building. If there is one entrance, the building controls the traffic in a centralized way. If the building is covered in exterior entrances, stairways, and back doors, the building controls traffic in a decentralized way.

Support our local artists:
Cryptolit of the day:

https://steemit.com/cervantes/@cloudjester/bufoneria-literaria-parte-1-el-tesis

CryptoBeat of the Day:

twanz - minimix

https://soundcloud.com/twanzie/mini-beat-bass-mix-analogtwanz

Peace

Legal Disclaimer: This is only our opinion, make of it what you wish. What does this mean? That means this is neither advice nor recommendation to either buy or sell anything! Our intention is that it be used as informative or for entertainment purposes.