Using Chance To Increase Crypto Portfolio Returns

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Avatar for mypathtofire
2 years ago

In gambling, bank management (or preservation) is a key activity that each person involved in any type of betting activity is always keenly focused on.

The reasons for this are to avoid a wipeout but also to help maximise returns.

One of the ways to maximise your returns is to turn over your bank as often as possible in order to increase returns.

If your "edge" was say 5%, then turning your bank of €10k over 20x instead of 10x would double your returns. (€10k profit instead of €5k profits).

What we can learn here is that we should not leave our crypto funds idle. They should be constantly working for us if we want to maximise returns.

Even the best gamblers with a huge edge go through periods of long streams of losses. It is important not to try to chase losses but another method gamblers can manage their bank to ensure they don't get wiped out and increase their possible returns is to actively manage their staking.

In order to know how big is your edge, you would normally bet with even stakes. This is also a safe way to manage your bank, each stake is a small % of your total bank (say 2%), so you won't suffer if you have a run of losses.

But if you have an actively managed bank, you can take advantage of chance.

Beating Lady Luck?

If you are going through a run of wins, you would start to reduce your stake amount as chance dictates that your winning streak should end with each further win.

If you are going through a losing streak, you should start to increase your stake amount as the chances are that your losing streak will end with a higher probability after each loss.

Crypto Portfolio Management

How can we apply some of these simple lessons to our crypto portfolio?

When investing in various crypto projects, we should be sure to consider our allocation amounts and use variable investment amounts instead of fixed amounts per investment type.

After investing in a crypto coin that has mooned, you could consider to reduce your investments in future possible mooning tokens because the probability of hitting 2 home runs one after the other is very low.

The other way could also be true when you have had a run of failed crypto investments, it could be worth to steadily increase the amount you invest as the chances of you hitting a home run steadily increase.

Actively managing your total portfolio allocations and diversification per investment can be a useful tool to maximise returns.

Please note this article is for educational purposes only and is not intended as investment advice.

Thanks for reading

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Avatar for mypathtofire
2 years ago