CryptoTrading for Beginners Part 8: Analysing portfolio performance using historical data

in cryptocurrency •  2 years ago 

Welcome to Part 8 of a series of articles about CryptoTrading for Beginners.
For an overview of previous parts, scroll to the bottom of this article.

Today I will look at our portfolio using historical data.
The point of this is just to show you want could have happened in the past and if we can learn something from it.

Use case 1: Even distribution

Let's assume we started on January 1st with a budget of $2000.
We will invest in our 4 coins: BTC, ETH, LTC and ZEC that I mentioned in the previous articles in this series.
If we distribute our budget evenly over each coin (buy $500 worth of each coin or BTC 0.5008363968, ETH 61.1995104, LTC 110.864745, ZEC 10.31565917), this would be the result today:

chart (5).png

In other words, if we had invested $2000 and didn't touch our portfolio until today, the value today would be $45,415.
If I'm not mistaken, that is 22,700% profit.

Use case 2: Weighted distribution

Remember our portfolio that we created in Part 1:

  • BTC 35%
  • ETH 30%
  • ZEC 25%
  • LTC 10%

So let's start with the same budget of $2000 on January 1st 2017 and divide it using our distribution ratio (BTC 0.7011709555, ETH 73.43941248, LTC 44.34589, ZEC 10.31565917).

This would be the result today:
chart (6).png

In other words, if we had invested $2000 using our portfolio distribution and didn't touch our portfolio until today, the value today would be $47,694.
Now the difference in even and weighed distribution isn't that big. Only $2279, but that is still more than our initial investment.
I'm not saying you have to use one or the other, I'm just showing you the numbers. And be aware that there is no guarantee for the future! I think anything above 10% is already a good investment.

One thing to take away

If you look at both graphs, you will see two big drops. One around July and one in September. This is when people usually start panicking and sell their coins. Because they are not looking at the bigger picture. Always look at your performance on a longer term and be aware that there will be fluctuations. Patience really did bring big rewards if you had made this investment at the start of the year.

Disclaimer: Be aware that I'm just a guy on the Internet writing about stuff that nobody really knows what is really going to happen. Do your own analysis and take responsibility for your own decisions. I'm just sharing my thoughts and might be completely wrong about this.

Previous Parts in this Series

In Part 1 I talked about choosing your portfolio. We did everything on paper before actually buying any coin.
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-1-choosing-your-portfolio

In Part 2 I explained how to buy your first coins using Coinbase.
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-2-where-to-buy

In Part 3 I discussed how to use Exchanges.
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-3-using-exchanges

In Part 4 I showed how to transfer Bitcoin from Coinbase to your Bittrex wallet
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-4-transferring-coins-to-wallets

In Part 5 I wrote about what to look for when choosing a CryptoCoin to invest in
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-5-what-to-look-for-when-choosing-a-cryptocoin-to-invest-in

In Part 6 I discussed how to focus on the macro instead of the micro
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-6-focus-on-the-macro-instead-of-the-micro

In Part 7 I wrote about portfolio rebalancing
https://steemit.com/cryptocurrency/@gorik/cryptotrading-for-beginners-part-7-portfolio-rebalancing

Anything else you want me to cover? Let me know in the comments or join my free group on Facebook

Stay tuned for Part 9 of this series! And don't forget to upvote my post on SteemIt :)

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Good advice @gorik. Just tossing this into the realm of speculation, but I think it is important, about Musicoin. The big news for Musicoin is that Russia's IPChain announced their intention to work with them. Check out Musicoin's address to the forum here:

Musicoin Addresses the VI St. Petersburg International Cultural Forum
Watch here on DTube!
It was part of this panel which more info is on this post:
Russia's IPChain and Musicoin to Join Forces?