Let's say I have 1k USD to invest in BTC or ETH and I invest the half of it $500 and the other half I'm keeping to buy back if the price goes down (some kind of protection?). A friend of mine has multiple open position in different cryptos and at the end of the day some of the cryptos gives him profit, but some of them losses, so he's at 0 (back where he started). Some days he makes good profit, but other days he's in loss.
- If I'm going in with all of my money and the price goes up then the profit is bigger (50%), but if the price goes down I can choose between: cash out at the moment with a loss or to wait days, weeks or months until the price goes back (can't trade anything because all of the money is already invested) to be back at 0.
- If I'm going in with half of the money and the price goes up, then the profit is lower (-50%), but if the price goes down, then the chances are I can buy back the crypto at a low price and wait until reaches a price that my investments will cancel each other out, so I will be back at 0.
What do you think about this risk management? How do you invest your money (if you're not a holder)?
It is not advisable to go all in with bitcoin or ETH or any other crypto currency. It's good to have a back up fund for any emergency. So I would go with the second options to keep half of the fund handy with me to be able to buy back if the price goes down. It will help me average out my bitcoin purchase price.
Also always try to diversify your investment. Never put all your money in to a single currency. We have a lot of good crypto nowadays so try to invest in more than two cryptos. IT will help you to protect the capital investment and you will be able to recover the losses you made from another currency.