Investing in Crypto-Currencies

I've been investing in Steem since November 2016. I invested up to $1300.00 US. When the price spiked up in March, I started to freak out. Not only had my investment started to increase in value, but I had no way to hedge the increase the of value. Until, it hit me that we have the internal market. What this meant is that if I could get some Steem and convert it to SBD I could hedge some of the risk of Steem losing value.

Hedging or buying insurance

Is an investment strategy that allows you to reduce the risk of price movement against your main investment position. If the price of the asset goes in the reverse direction you just have to suck it up and accept the loss in value. Unless you have a hedge, then the hedge should be increasing in value. A hedge position would normally be in an inversely correlated asset.

An example would be a position in the S&P500 and your hedge could be in GLD. Normally when one is going up the other is going down and vice-versa. In Steem, as the price of Steem goes up the value of SBD goes down.

I usually hedge at 30%. In other words I will take thirty percent of my position and convert it to a hedge. Seventy percent position in an asset. Thirty percent hedge.

What I did to hedge

I had some Steem sitting in my account @msteem - 200 Steem. I bought 200 Steem of SBD on the internal market. I then put a buy order for Steem selling my SBD. I adjusted the price I would buy at, to give me 400 Steem. I made a 100% profit. I then transfered 200 Steem to my @gutzofter account and powered it up.

More freak-out

So there I am, congratulating myself on a good trade, and I'm still freaking out because I no longer have any kind of hedge. What am I to do? I'm a firm believer in Steem, but with the Hardfork issues, the loss of @Dan, and hardly any progress on the roadmap, it was a total freak-out. My money is at the whims of the muses. I couldn't stand-it anymore, so I started to power down. I have to move my hard-earned dinero someplace. Along comes @lukestokes, the bad-ass that he is.

Diversification

Diversification is a strategy for investors to mitigate the risk of having all your eggs in one basket. If one asset is going down then the others should be going up - of course this is a really simple explanation. Reading @lukestokes's post - A Simple Example of Shorting the U.S. Dollar With BitShares - on Bitshares and how to use #openledger gave me some ideas. I took $200.00 US of Steem and moved it to openledger. The first thing I did was borrow US Dollars and bought Bitshares - shorting US Dollar -with the borrowed dollars. I then bought BTC using 70% of my BitShares. As the price of the dollar dropped I kept adjusting my collateral requirements. I then bought a wee bit of some ETH.

In my @msteem account I've got a spread Steem/SBD going. hopefully it's going to pay of in the next day or two. I will talk about spreads in a later post or you can google if you wish.

Making money even though I'm losing some money

• At the moment I'm no longer powering down.
• My short Dollar position is rocking.
• My BTS Position is rocking.
• My BTC position sucks.
• MY ETH position Sucks.
• My Steem Power is to the MOON.

Need to peg my position to one commodity. This will be then next thing I work on.

Conclusion

If you're like @karenb54 you too can start using crypto-currencies like a pro. I FLIPPING LOVE STEEMIT NOW I AM RELAXED WITH THE WHOLE PROCESS.

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