How to be your own index fund
It’s certainly nice to let the professionals run an index fund for you. But some people like myself, who read Cryptopanic and other news sources all day long, feel we know what is happening and know what basket of coins to buy by ourselves. For us, we want to control which basket of coins we purchase and accumulate profits from.
Furthermore, AND THIS IS MOST IMPORTANT, when our chosen coins drop in price, we eagerly buy more and so does everyone else who recognizes they are getting a steal. Let’s say you were in a thrift shop and you saw a Ralph Lauren Polo Shirt for $3.00, you immediately buy it because you know it is worth more. Now let’s be practical. In the crypto-world, the Binance token is very valuable – it allows you to save on fees when you trade at Binance, that means that there is a lot of buying activity of this token and even more buying activity when it is cheaper… people want to get it whenever they can for the best price. So it makes up 50% of a particular portfolio. And Bitcoin? Well whenever it drops in price, it means you can get it for cheap and a lot of people want it for cheap, so a lot of people will buy it also. So that is the other 50% of this portfolio – just two coins and it made me $1,600 in one week… why? Because when one coin increases in value, it sells it off and buys some of the other and vice versa. And when one coin decreases in value, it buys up more of it to keep the portfolio at 50-50. A dip in the price of these is an opportunity to buy something that is valuable now and for the long-term. And there are apps that handle the periodic portfolio rebalancing for you.
Here are some good applications that allow you to create a basket of coins and have the profits from them re-distributed among the coins on a periodic basis.
- Shrimpy – no cost. Great intro article on rebalancing is here.
- Coincube – does rebalancing based on surges and drop detection instead of periodically (Shrimpy and HODLbot are periodic).
- HODLBot – initial thread and link to discussion. Limited to Binance and monthly rebalancing. Fixed set of coins. Costs money.
- Chain Capital – in beta
- Investy –