Portfolio Diversification - Investing and Spreading the Risk in case of Disaster

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1 year ago

As an investor, "the pain of losing part of your investment is inevitable but suffering is optional". Mostly when a financial disaster hits you it does not give you a hint it just strikes you, if you are lucky you might foresee the events and take heed. A lot of investors take huge blows and suffer the aftermath and they will start regretting some of the things they were reluctant to do. So as an investor, you have to be vigilant and take all the necessary steps to protect your portfolio. So you can't run away from losing when you are an investor but at least try and cut small that loss or walk away with small profits.

Forex and Crypto losing Losing Strategies for Retail Traders.

In gambling they always say "the house always wins", they know very well that no matter how hard you play they will always win. You might win today but tomorrow you will lose more than you won the previous day. In the Forex and Stock Market when Investment Banks see that the market is about to crush they make sure that they create Indices and rate them e.g AAA, AAB ABB and these will be priced differently and the investors will invest their money and when the Crisis hits the banks will be safe and the investors will suffer.

Then in the Forex Market, they always make sure the odds are in their favor, you might win the fight but they will always win the war. They are equipped with Trailing Stop Losses and Stops losses to make sure they rip something from you before they go their true direction. Let's say the Market is supposed to buy today, they might go down for 40 pips then retrace and maybe go 20 pips above the opening price and they are done for that day. They first hit the stop losses in the 40pip range and go up a bit so they will always have a winning edge.

In Crypto Trading they make use of Hyping and made you think that the project is going 1000x and they walk away with the money. In Crypto, not everything that glitters is Gold, as for me if I see a crypto asset being hyped too much I always stay away and that is the reason I didn't buy Shiba Inu because there was too much Hype. If you are that investor who is driven by too much Hype be careful, you might let go of your BNB, ETH, or another other precious crypto asset and buy a useless token expecting to be rich.

Taking Advantage of Safe Havens

In Cryptocurrency and Forex trading there is always a shield we can use to safeguard in times of crisis. We can use these to safeguard our portfolio balances so that we do not bleed when the markets are crushing.


In the Forex, and Stock Market metals are mostly used as safe Havens, especially Gold. This has been used for so many years and the investors have much faith in it especially when the Economy is bleeding. Imagine there is a war and you invested in the stock market, there is no doubt that you will suffer a loss when the market crash due to war.

Let's say you had money in your bank account and war is on fire and you just take your bank cards with you so that you will be able to make some withdrawals. There are higher chances that you might not be able to make those transactions. Remember there is a war and banks will be closed and your transactions are likely to fail if things get worse. If you had bought some gold you might just go with it and you can liquidate anytime you want. Gold will be favorable in times of crisis that is why when companies are closing and stocks and Forex pairs fall only gold and other metals will be bullish.

Stable Coins

The name says it all, Stable meaning its value is always stable and does not fluctuate. They are pegged and $1 and these are most favorable during taking profit times and when markets are bearish. There are a lot of them e.g TerraUSD, USDC, Tether, DAI, and a lot of them. According to a market capitalization of stable coins, the market size is $188,819,866,197 meaning to say investors are making use of these.

Diversifying Portfolio

As an investor do not put all your eggs in 1 basket but make sure you spread it and invest in different financial instruments e.g Stocks, Metals, and CryptoCurrencies. If the Economy is performing bad investors will not have money to invest in Cryptocurrencies and Stocks because they will be struggling to make ends meet so if you use your last penny to buy these 2 there are chances that you will be at a loss for a long time unless the market is about to rebound. You wouldn't know when it will rebound so it will be wise to have a portion of these 2 just to be safe then put another on Metals so that whatever happens your portfolio will always be safe.

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1 year ago