Really great write up @cryptographic :) A balanced as well as diversified Portfolio is definitely important and quite easy to be done by everyone. But just like you mention as well in the end it´s the emotions that might make you take exactly those actions that you shouldn´t...
Controlling your emotions on such a volatile market is especially tricky as you never know how high or low it´ll go, so that FOMO & FUD might mislead you into selling low and buying high instead.
I would therefore always recommend to keep a certain percentage of your Portolio invested in the long term and just use a portion of it for short term gambles. That way you minimize your risks while still having a chance on high profits :)
Controlling your emotions is probably 90% of the game, and a completely mechanical, automatically adjustion portfolio (which only exists in theory) totally eliminates all emotion while buying low and selling high. Nevertheless, everything within the portfolio, all the rules for rebalancing, etc., all the criteria and limits are subjective, and, of course, changeable. That means that you can even break the portfolio's rules you have set, so emotion is still a very important enemy to keep in check. Like anything, it looks great on paper, but then we've got to put it into practice, and the worst thing we can do is break our rules when those rules should be kept. As you say, we never know just how high or how low something can go, and that's why it's best to just sell or buy those small percentages that we need to keep each holding in balance, even with the longer term portions of your portfolio. And of course, only a small percentage of the total portfolio should ever be used in shorter term trading (some even think about that as a completely separate "account").