Portfolio rebalancing is the free lunch you've never heard of.
Say you have 1BTC worth each of shitcoins A, B, and C, so 3 BTC total. Shitcoin C doubles in price, so you sell some off and buy more A and B til you have 1.33 BTC worth of each. Then C dumps back to starting price and you rebalance again. At the end of it, you now have 3.45 BTC worth of shitcoins to your name.
But, say shitcoin C halves in value instead. Tough luck. You shave off some of your A and B stacks and double down on C so you have equal value in each. Then C returns to its starting price and you rebalance again. You now have... 3.45 BTC worth of shitcoins to you name.
That's right, regardless whether your shitcoins go up or down, you make money when you rebalance frequently because you're taking advantage of asymmetrical movements in the market. It's a stress-free, emotion-free way to constantly sell high and buy low. You're constantly reducing your exposure to overbought coins and increasing your exposure to oversold coins, in a gradual stepwise fashion.
I know you want to go all-in on a single token and ride it 1000x before cashing out. But that's not how smart people make reliable money. If you're not rebalancing at least once a week, you're a certified brainlet. Once a day or even hour is better. Writing an algo to do it for you while you sleep, even better.
Anyone still just HODLing is missing out on free money.
>Then C dumps back to starting price and you rebalance again. At the end of it, you now have 3.45 BTC worth of shitcoins to your name. Wouldn't you have 3.66 BTC?
Joseph Morris
You just figured this out?
Holy fuck you're slow. Weighted portfolios have always been the way to go. The question is just when to rebalance so that fees don't eat you up.
Aaron Nguyen
>asymmetrical... crypto... kek
Joseph Perry
More like
>the 3 shitcoins dump at the same time because of btc
William Wilson
Only works in general bull market conditions.
Cameron Hernandez
this. compounds losses in a bear market
Benjamin Howard
This.
Andrew Hill
Works in any market, bear bull or sideways. Only time it doesn't work is when all your shitcoins move up or down in perfect lockstep, as your folio %s stay the same and there is nothing to redistribute. This doesn't ever happen - I know it feels like it happens whenever BTC gets a stiffy or shits the bed - in actuality some coins follow it faster/more closely than others and that's all you need to take advantage of asymmetry and make free money.
It's actually probably best in sideways markets where shit keeps trying to moon but failing. Danger of rebalancing is that a coin just moons, and then keeps mooning and mooning while you steadily divest yourself of it. Or the opposite case with an infinite dump a la Confido or Segwit futures. These are outlier cases though, and even shit like Raiblocks had consolidation periods during its runup where you would have funneled money back into it for the next leg up using this strategy.
FWIW I've run over 100k backtest simulations using even portfolios of 10 random shitcoins of binance, using very pessimistic trade assumptions (like losing .5% on each trade due to tx fees and spread), and rebalancing is the more profitable approach literally 99.6% of the time vs hodling.
James Bennett
holy shit how isn't everyone a millionaire already?!
Samuel Gomez
bingo
Sebastian Taylor
>Danger of rebalancing is that a coin just moons, and then keeps mooning and mooning while you steadily divest yourself of it
Yup, I've missed some gnarly moons doing this.
Jayden Jackson
This
Adam Howard
I don't know man, it seems most coins are pretty highly correlated with bitcoin to me except for BNB or BIX or such.
Gavin Reyes
If all your shitcoins nosedived in perfect synchrony, there'd be nothing to rebalance at all. Your portfolio %s wouldn't budge. So, even in that shit case scenario, it's no worse than hodling.
Gabriel Sanchez
you still have to be in a bull market for that. Lets say you go into 10 coins with 10% each, and one of them doubles, you make 10% of your account. But since you have to predict the bull market anyways for this to work, you just go in on a coin with some hype and make 100% on your money in one trade, with no work at all
Austin Long
If you want something that doesn't move with bitcoin it's Tether really so why wouldn't you just trade with that?
Carter Taylor
this is why you actually do quarters, and keep 1 quarter in BTC
boom, you can always rebalance to equal value
Gabriel Butler
This is just basic trading tactics. It's a big reason why at least some diversification is important. Just trading one thing, a currency or security or whatever, cuts you out of the possibility of using this strategy when needed.
Good entry and exit strategy still rules though. Never ever take profit out of a winner in order to average down on a loser unless you have a good reason to sell the winner at that time. If the charts are looking like bullish continuation on your winner and bearish continuation on the loser, sell the loser at a loss and average up on the winner OR hold that cash aside for better reentry on the loser or a good entry on a different trade entirely.
Andrew Campbell
Bullshit. Literally the market could go sideways all year with coins wobbling at random in a 10% range and you would make significant money off this strategy vs HODL. You are always selling off pumps and filling in dips. You don't need the coins themselves to go anywhere to profit off volatility.
And if it were actually so easy to all-in one hypecoin after another for consecutive 2xs, everyone would be a billionaire by now. Are you a billionaire? Probably not, because you're not special and every 2x you bagged has been ruined by a shitty picked that went -50%. Meanwhile rebalancing is a braindead easy and risk-reduced way to make constant, appreciable gains in almost any set of market conditions.
BTC, Tether and especially BNB are great for keeping a quarter or even a half of your folio in. You draw out of them in a downturn and dump into them during an altcoin run. BNB tends to straight-up run counter to the general altcoin trend and everyone's folio should be at least 10% BNB in my shithead opinion.
The best thing 99% of crypto nerds can do is admit they suck dick at trading and reading signals/indicators. Maybe you're special, but most aren't. So for most people, rebalancing on an automated schedule beats trying to read the tea leaves any day of the week.
Chase Price
That's why you set your bags and hang on till 2020.
Carter Flores
Like I said, the mythical moon mission that just goes up and up forever is a fable. In reality even 100xes experience dips and consolidation periods. Stashing your profits in other coins on each leg up and then funneling your money back in as it consolidates is still going to be more profitable than riding it straight to the moon. In -almost- every case.
So maybe there's that 1% of the time where it would have made more sense to HODL. Why are you worried about that 1% chance? Shouldn't you be more worried about the 99% chance that you're leaving money on the table by NOT implementing a rebalance strategy?
Christopher Thompson
You are right, but rebalancing to shitcoins isn't the answer. Answer is to have a core portfolio. So when you hit big on a shitcoin you move profits to BTC/ETH/XMR or something like that.
Gabriel Moore
Right, I am just using 'shitcoin' in this thread because every cryptocurrency is a piece of a shit at the moment. I would recommend people hold a balanced, weighted portfolio of their favorite long-term HODL coins. Preferably don't dabble in actual shitcoins at all, or if you have to just peel off a few ether from your main stack and just write it off as a gambling loss before you even get started. But leave your main portfolio in solid coins and use a methodical rebalancing strategy to make steady, reliable gains.
