HOW TO MAKE A KILLING WITH CRYPTOS

There are two ways how one can make a killing in the markets: investing with leverage or investing in assets with the highest volatility. Traditionally, forex and futures have offered the best possibilities for leverage investors. The problem with leverage is still that it can easily wipe your account if misused. This is why the second type of asset mentioned above is the best way to generate massive returns. Now that the cryptocurrencies are offering staggering profit potential, they might be the new #1 asset in the world to become rich. Let me provide you a simple example how to achieve this.

Everyone has heard of momentum/trend-following strategies. The Turtle traders from the 90s were probably the most well known and successful trend-followers. However, pure momentum based strategies are pretty static in nature and do not offer the best potential when the price is shooting over the moon. The best ways to profit from the trend is to use anti-Martingale type of strategies where you load more of the underlying asset when it goes in your way. This kind of strategy follows very well the famous Jesse Livermore's method. Below is a simple example:

Rules:

You specify a price tolerance after which you always purchase/sell.
If the share price increases by a specified amount (=price tolerance), say 1$, you purchase X shares more.
In the above example the position value is 1$ * X = X$. This means that every time the price moves 1$ in either direction, your portfolio value changes by X$.
If the share price decreases by the above specified amount, you decrease your position by X shares.

Example:

You purchase an asset at a price of 10$, 10 shares in total. (Profit: 0$)
The price increase to 11$, so you purchase 10 shares more. (Profit: 10$)
The price increase to 12$, so you purchase 10 shares more. (Profit: 30$)
The price increase to 13$, so you purchase 10 shares more. (Profit: 60$)
The price decreases to 12$, so you sell 10 shares. (Profit: 20$)
The price increase back to 13$, so you purchase 10 shares more. (Profit: 50$)

So, as long as the trend goes in your favour, you add more. This means that your profits are exponential and losses linear. Reflect on the previous statement and repeat it in your mind. With the above mentioned strategy your profit is determined by the following formula:

((ending_price - start_price) / 2 * amount_of_winning_positions - amount_of_losing_positions) * position_value

With the above example you get:

((13$ - 10$) / 2 * 4 - 1) * 10 = 50$

Lets take a real world example by looking at a historical Ethereum chart for 2017.
Screenshot from 2018-01-07 20-34-53.png
[Source: bitinfocharts.com]

At the beginning of 2017 Ethereum traded @10$. Lets then assume that you would have had a price tolerance of 10$ and a position value of 1000$. This would have meant a following trade history from January to May:

Purchase Ethereum @10$ with 1000$, on Jan 2017. (Profit: 0$)
Purchase Ethereum @20$ with 2000$, on Mar 2017. (Profit: 1000$)
Purchase Ethereum @30$ with 3000$, on Mar 2017. (Profit: 3000$)
Purchase Ethereum @40$ with 4000$, on Mar 2017. (Profit: 6000$)
Purchase Ethereum @50$ with 5000$, on Mar 2017. (Profit: 10000$)
Sell Ethereum @40$ with 5000$, on Mar 2017. (Profit: 5000$)
Purchase Ethereum @50$ with 5000$, on Mar 2017. (Profit: 9000$)
Sell Ethereum @40$ with 5000$, on April 2017. (Profit: 4000$)
Purchase Ethereum @50$ with 5000$, on April 2017. (Profit: 8000$)
Purchase Ethereum @60$ with 6000$, on April 2017. (Profit: 13000$)
Purchase Ethereum @70$ with 7000$, on May 2017. (Profit: 19000$)
Purchase Ethereum @80$ with 8000$, on May 2017. (Profit: 26000$)
Purchase Ethereum @90$ with 9000$, on May 2017. (Profit: 34000$)
Sell Ethereum @80$ with 9000$, on May 2017. (Profit: 25000$)
Purchase Ethereum @90$ with 9000$, on May 2017. (Profit: 33000$)
Purchase Ethereum @100$ with 10000$, on May 2017. (Profit: 45000$)

Not sure about you but I would take the above profit home any day.

Sure you could have loaded @10$ by 10k$ and made much more but what if Ethereum would not have shot to 100$ in five months? This is why it is better to wait for price confirmation and load more once the trend is confirmed. Remember, the trend is your friend and you should not fight it.

Any ways, my strategy is to keep on loading steem+ethereum while they are shooting over the moon.

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