Hi there, this is your friendliest crypto trader from the planet Crypton sending you some market wisdom to help you diversify and have a more fluid trading experience.
For those with limited funds trading cryptos, this is a really useful strategy, diversifying, because putting everything in one basket is a make a break deal and if it goes south, the only option you have is to infuse fresh funds or just wait for your coin's price to go back up.
Like me, I have limited funds so I need to be really careful not to use up all my funds that will put me in a precarious situation.
But first there is something you have to know. These cryptos as you know are projects, and each of them have different purposes. It's a bit complicated because it depends on the news or individual developments, but I kind of classify them cryptos.
I classify some as full network cryptos like Ethereum, Tezos, Eos, Tron, and Solana where they offer a myriad of services but maybe the most common thing about them is other coins can be made from their respective networks.
Ethereum has those ERC-20 tokens. Tezos has a dex and Kolibri, a stable coin. Tron have Wink, BTT, Live, JST, among others. All of them have DeFi, NFT, currency/payments, and just so many other other things.
Polkadot and Cosmos are interoperability platforms that allow integration of services from one platform to another. Yet they are also platforms that could be considered a full network service but they are kind of unique because they specialize in cross-chain functions. Both Polkadot and Cosmos have several projects going for them.
You have the game coins like Axie, Gala, Sand, Mana, Mbox, Alice, YGG, among others. Game coins are different beasts because they don't really follow Bitcoin's movement but only if when they have gotten their customer base like what Axie has achieved. Game coins are also one of the biggest users of NFTs, and that's why there is really a lot more room to grow on this sector as more use for NFTs are being discovered.
Although DeFi is already a feature on the full service platforms, there are a lot of coins that are specific for DeFi purposes only like Alpaca, Harvest Finance, Jack Finance, Dego, Corn, Shiba Inu, which usually offer staking and pooling services. Yes, Shiba Inu is, and you thought it is just another meme coin.
There is also the swaps like Pancake Swap, Uniswap, Sushi Swap, Burger, Bake, Trust Swap which is basically DeFi too but some are DEXes too, so that's why I classify them differently.
Then you have your specific purpose coins. I actually like these kinds like XRP, Theta, Foam Space, Secret, Big Data Protocol, Sia Coin, Mass Vehicle Ledger, among others. I like these kinds because they are unique in a way that no other crypto can match their utility. I'm sure there are more, and I'm on the lookout for them.
Then you have your shitcoins, pardon the language but that is what they are really called anywhere. These are the cheap coins where even buying $10 worth can give you at least 100K to a billion units. Most meme coins are in this class but Doge and Shiba Inu have somehow declassified themselves from the stink of shitcoins and are actually now on the big boys club. Imagine that?
I am pointing out these nuances as even though you diversify, say you have $500 you just want to play around for trading, and then you'll buy two coins but on the same sector. Although it's always different for each coin, like each one have their own developments and marketing strategies, sometimes though the market moves in sectors.
It's not a problem, of course, but for people with limited budget, and when the winds of trade are based on sectors, like say all you have on your bag are meme coins, and Shiba Inu is down, most likely, other dog coins might be down too.
I think the best advice I can give in relation to this strategy is that there is no perfect trade, unless you are King Midas that every thing you touch becomes gold. But if you're not King Midas, then the second best thing is to have contingency plans when your first trade go a bit sour.
Let me show you how diversifying can be helpful. Let's say you have $600 and you put $200 each on three different coins. So you wanted one full service coin and say you chose Ethereum. Then you wanted a gaming coin and say you wanted a metaverse game, and so you chose Sandbox. Then lastly you wanted a bit of a speculative coin and got Dogelon Mars.
We're talking of trading here, not long-term, just to be clear. The rationale behind this is that in case one of the other coins plummets in price, you can draw funds from the other 2 coins you have to buy again at the bottom of that crashing coin.
As I have said, there is no perfect trade unless you can see the future. In my case, I have made many profitable trades doing this strategy. As they say, you win some and you lose some. But I say, you lose some and you win more.
Track down the percentage of how those three coins went up or down. Let's say one coin went down 50% and the other one just went down by 5%, for me, I would sell the one that went down 5% and buy again on the one that went down 50%. The trick really is wait for it to bounce back up.
Sure, you can buy when it's 50% down but if it's not yet rebounding a little up then that means there's no support yet, and that could still lead to further decrease of the price. Or if you are still not sure if there is support already but you just feel the price is too low to resist, then sell half only from the coin that went down 5%.
If it still continues to descend, then make sure to feel the bottom. You'll see the bottom when it's not going down anymore even though no one wants to buy it up. That's the time to get the remaining 50%. Since it's way cheaper, you'll get more coins at the bottom.
Of course, when the market is bullish, by all means go all in, but then when you think the market is uncertainly bullish or bearish, like maybe you feel the market could go either way any time, then diversifying is the best method to go about it.
Actually all these words I spout won't really mean much to you until you trade yourself because as you buy and sell your favorite cryptos, you would get to know them better and have a feel for them when they are poised to go up or when they are about to break support. But at least now, reading this, you can have some sort of strategy.
Again, thank you for reading, this is Metapiziks from the Planet Crypton. Until the next data transfer.
