I may well be preaching to the converted here and what follows here is a brief discussion on the importance of maintaining accurate data. This has nothing to do with GDPR or personal data protection issues.
Information is power and power is information
Data is everything – and the more you have the better your analysis and greater the rewards.
Taking an ad hoc approach to Crypto investment might work. Just go ahead and buy some BitCoin and then sit back. Check it once a month and you might get lucky and achieve a bumper harvest. Or you might get unlucky and find that you bought high and are staring at a 20% loss. Of course waiting a bit longer can work as there is a sense with Crypto, a bit like buying property, it will come good in the end with the trend always being ultimately upwards.
Everybody within Crypto knows the best time to buy Crypto was 10 years ago and the second best time is today.
I often speak in my posts about leveraging and to put it simply leveraging is about maximising any asset potential. In this context this means growing your Crypto portfolio, which comes down to two objectives.
- Increasing the QUANTITY of CRYPTO held
- Increasing the QUALITY of CRYPTO held – monetary value.
These frequently go hand in hand but not always.
- To achieve growth in these areas data and the value of that data comes down to two aspects.
- Reading the market correctly
Understanding and analysing data from your own account to work out the best way of leveraging growth.
So good data feeds the objectives which in turn are better defined and understood. Getting a grasp of this maximises your ability to leverage growth.
A simple example of maximising leveraging can be to consider TEZOs staking.
Coinbase offers a staking reward on TEZOs of 4.03%. Let’s call it 4% for easy maths. This reward is received in TEZOs incrementally every three days after holding initially TEZOs for between 35 and 40 days. Again for the sake of ease I am not compounding the rewards gained as the intention is to show principles.
You can hold your TEZOs and sit back and collect the rewards. Imagine holding £1000.00. Annual Return is £40.00, subject to fluctuating prices which equates to £0.33 every three days. However due to the movement of the market it is better to think in terms of held TEZOs. So now reimagine (same maths) that you have 1000 TEZOs. Staking rewards will give a return of 40 TEZOs a year or 0.33 TEZOs every three days or 3.33 TEZOs a month.
Sounds good and is inflation-busting assuming the TEZOs value is stable.
However you can do better and this is leveraging.
Instead of holding, what if you use the principles discussed in ‘It’s Not All about Money.’. Reading the market means moving TEZOs into a currency that is on the up and collecting the return.
I change 100 TEZOs for BItCoin and watch the market. This is even better to do when TEZOs are high and due a period of settling / reducing. At the same time BitCoin values are increasing. There doesn’t need to be a significant increase in BItCoin value to achieve this, but let’s say it moves just 1% in a day. I am suddenly 1 TEZO up in a single day and the beauty of this is it can be done several times a days and every day.
Of course this depends on reading the market correctly. Based on the given example instead of achieving 3.33 TEZOs from Staking the return is 30 TEZOs based on a single return every day. This is leveraging and at this rate even a 0.2 increase per day (yield of 6 TEZOs per month) can make it more worthwhile than holding and claiming the staking rewards.
The principle is simple hold when the TEZOs value is low and leverage when it is high.
This is where the importance of data comes in. The more data you have the better you can read the market, but more importantly you can analyse the methods that yield the greatest growth and understand how different market conditions create different investment options (holding, buying, selling, etc).
Getting your data right is very much a case of setting up your spreadsheet(s) correctly so patterns can be recognised. A data driven approach helps create strategy and establish targets and intuitively leads us away from ad hoc approaches that may well yield growth, but it is chaotic and disordered.
Data brings clarity and helps us to focus our approaches to yield maximum advantage.
This is just a simple example of leveraging data and I will be writing more on Data in the near future.
Thank you for reading.
Find out more about my investment tips. Feel free to bookmark and tip.
Tactics For Newbies
Crypto Strategies - An Introduction
Milking the Cow
It’s Not All About Money
The Magical Money Tree
Blending Strategies (the Internal Conversion Engine)
Putting the Brakes on!
Breaking Down the Wall