If you can trade cryptocurrency systematically and profitably, why not? As a stock trader, I wouldn’t allocate 100% of my capital to a young and wild market like cryptos. I do trade cryptocurrency and trade it systematically but it’s not my main thing. Most of my money is in stocks but I have a crypto system, which I quite like. It’s new relative to my stock trading system, so I’m proving it up. You can trade those markets systematically but just don’t bet your life savings on it because the corrections and sudden collapses are very extreme compared to the more established and better regulated markets.
Just this week, we’ve seen a very sharp collapse in the price of many Alt coins and Bitcoin even, and then it rallied back; it’s wild. If you want to trade, crypto is good but do it systematically. Don’t try and look at the charts and pick your entry and exit points discretionary because the moves are so big and fast, your emotion will get the better of you, and you’re going to lose. It’s just like any other market, you need a proven edge to make money, and you need to take that edge, and you need to apply it with solid risk management. So make sure if you’re wrong on a trade, you don’t lose too much.
And remember that cryptocurrency is a very concentrated market. There’s a lot of internal correlation, different coins go up and down a little bit. But if the market collapses, they mainly all collapse. So please don’t fool yourself into thinking that if you’ve got 50 different coins in your portfolio so you’re diversified, so you’ll be okay. You could still have a massive drawdown.
Crypto trading could be part of your portfolio, but not all of your portfolio. I have stocks, property, gold, and different investments in different countries. I think diversification is important. I’m not silly enough to think that just doing one thing my whole life will secure my family’s financial future. This new market has huge opportunities, and you can make a lot of money by trading it. But you can also lose a lot of money quickly through cryptocurrencies. So don’t just rush in thinking crypto is the saviour of your financial future; it’s not. It might be a part of your overall plan if you trade it well. I see a lot of cowboys in that market trading with high leverage and trading using unproven systems without backtesting it. And frankly, it’s financial suicide. So you can get the data, backtest it, make sure your strategies work, apply it with low risk, use low leverage, and it’s a market, it’s tradable.. I will always have the majority of my assets in more established, more regulated markets because that’s sound financial planning. I can’t give financial advice, but that would be my approach.