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Recently, I learned on a YouTube channel that individual investors use leverage upwards to earn high profits, while institutional investors use downwards. While the motivation of institutional investors is usually to hedge their positions, individual investors are trying to earn more with less capital.
I made my first use of leverage in my life by shorting Ethereum in April. The result was not bright, as it coincided with the period when Ethereum had a breathless rally. Despite this negative experience, I occasionally use leverage when I believe the market will move in a certain direction. Since the volatility is very high in the crypto world, the maximum amount is small. So that I do not experience much stress.
On the other hand, I can't help but ask myself the questions whether leverage is good or bad, in which situations and to what extent it should be used. The conclusion I have reached is that the leverage should not be used more than 2 or 3 times the crypto. In fact, it's not even required.
Another question on my mind is to what extent I should diversify my investments. Not putting eggs in the same basket and diversifying investments are among the first recommendations that come to mind about investment. Others argue that making a basket of various investment vehicles lowers potential returns. Moreover, diversifying the portfolio makes it difficult to follow up. Perhaps a middle way must be found in this regard.
When it comes to crypto investment, it is possible to talk about a HODL approach, and an approach such as buying low and selling high. Here's another dilemma. Here too, I think the ideal method is to apply the HODL approach flexibly. In other words, always carrying a certain amount of portfolio, but shrinking the portfolio when the market is very high, and growing it when the coins get cheaper.
Finally, the question comes to my mind, is there any need to invest in other coins when there is Bitcoin and Ethereum? Although some of the altcoins sometimes make crazy leaps, the majority of them lose value over time against Bitcoin and Ethereum. Of course, it is possible to invalidate the dilemma on this subject by taking a little of that and a little of that.
Perhaps the most important of all is to have a savings to invest. That's why you have to earn more and spend less. Easy to say, hard to do. I think it's a good thing that krypton is conducive to such a thing.