In a previous post I introduced the concept of ‘halving’ (see here) which should not be confused with Bitcoin Halving – which is to do with mining.
The article illustrates how existing funds can be used to leverage a bad investment and I would like to share with the community a real case study to demonstrate it works. I am going to use an arbitrary amount rather than the actual amount for illustration purposes, but other than that everything here is absolutely accurate
I used Coinbase, but that doesn’t mean I am necessarily endorsing them.
On 13th July I bought some COSMOS for £1000 @ £3.43 as follows.
Then the price promptly crashed and I saw my investment plunge, but I held my nerve as I had held back my ‘halving fund’ On 14th July I bought additional COSMOS with my halving fund at £3.08 as follows.
This meant that I was now in a position to use the second purchase to leverage both profit from the individual transaction and the original transaction. You will notice that in the second transaction I bought 319.8376623 COSMOS and here are the keys to halving that I was referring to in my last article.
- I want to extract Second Transaction Only Profits
- I want to leave some COSMOS unsold from my Second Transaction to reduce the impact of the original transaction.
So this is what actually happened. On 16th July I was able to make a sale at £3.31, but by toggling the Coinbase interface I sold based on units rather than price as follows:
The achieved profit after Coinbase fees was only £40.16, a profit of just over 4%, in one transaction which is significantly more than most bank savings accounts are currently offering. Secondly and more importantly the unsold COSMOS (0.76623) has now been effectively added to the original purchase making the total 287.9673962. I know it doesn’t sound like a lot, but doing it in a series of cycles with leverage an easier profit from what was a bad sale in the first place.
Soon after I sold the price plummeted to £2.98 and I got back on the roundabout once more to release more profit and improve the status of my original transaction. As it stands at this moment COSMOS has bounced back to £3.17.
The key to remedying a bad transaction is to invest more*.
Create a halving fund to act as a reserve.
* As in the previous article I am not advocating adding more funds from your bank account. Set a cap and stick to it. Just hold back in your fiat currency wallet a reserve for such circumstances.