About 9 months ago, I discovered Core Number Compounding. Soon after, I decided to give it a try. You may recall that, at that time, the market was trading sideways for weeks. This was frustrating as the method requires price volatility to work. Here is a quick recap of how CNC works.
You pick a number. Let's say you pick $2000. It could be $1000 or $10000. It's best to pick a number that allows you to do quick maths.
You then either buy $2000 of BTC or ETH. Or, you buy $1000 of each. We pick these because they are least likely to go into a death spiral compared to most alts. You can do this with alts as well, if you have reasonable confidence that they will trend upward in the long term.
If your $2000 grows to more than $2020, you sell off the $20 (or however much) to bring it back down to $2000. This is simple if you are only using one crypto. If you are using two cryptos, then then sum of both must be more than 1%, which is $2020. The only strange part is if one is, let's say $30 up and the other is $10 down, then you sell the +$30 and leave the -$10 alone.
If the $2000 drops by 4% or more, which is -$80, then you buy more to top off at $2000. Again, if you are only using one crypto, this is easy. If you are using two, then the sum must be $1920 or less before triggering a buy. If one is up and the other down, you only top up the one that is down. Leave the other until the next trigger level.
This is pretty much all there is to Core Number Compounding. When you use CNC, you constantly scrape off 1% gains and top up 4% losses. This way, you are ALWAYS buying low and selling high. This is why volatile markets are great, particularly those in long term uptrends. You could alter the spread to scrape off 2% gains and top up 5% losses. This would mean fewer transactions. The bigger the spread, the less sensitive it is to volatility.
DANGER: This doesn't work in bear markets. You'll constantly be topping up. If you want to ride this down, where you are constantly buying at lower and lower prices, you'll need cash reserves. Alternatively, you can move everything to stablecoin, wait for a bottom, and jump back in to profit from uptrend volatility.
Yesterday, I was looking at doing Core Number Compounding with Hive on Bittrex. I could use HIVE and USDT to try to maintain my core number. Then, the light bulb in my head flashed. I don't need to leave Hive to do CNC. I can do this with HIVE and HBD without leaving my wallet.
I would do this with $2000 worth of HIVE. When the price goes up, I could scrape off the excess HIVE into HBD. When the price goes down, I could top up my HIVE from HBD. Price has been volatile enough that this works.
I may have to start with $1000 of HIVE, however, so that I have $1000 of HBD for topping up. As the HBD total grows, I could transition to larger core numbers.
