Leveraged Portfolio – Adjustments, Additions & Capital Deployment

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15 Mar 2024

Multiple Bull Market Strategies
When it comes to maximizing the bull market effect, making use of multiple ideas and strategic approaches is key. I have addressed many of these over the years. However, one of the most effective approaches is to harness and multiply gains via leverage. Regular readers will remember that I began building leveraged long positions in several “blue chip” Crypto assets in early 2023.
Essentially, I began with Cardano and Solana. The approximate price zones were $0.25 and $19 respectively. I have slowly built up these positions over time, and continue to add to them during market corrections. I have since also included Polygon and Polkadot. Today, I again took advantage of another market correction and added some of these positions.
Not only that, but I also decided to add a few more up-and-coming blue chips. This particular portfolio is 10X leverage, and so I tend to focus on solid top-tier projects. I have now also incorporated Chainlink, as well as Near Protocol. I also managed to come up with a new formula, regarding capital deployment. One of the main reasons Crypto investors fail when they decide to incorporate futures trading into their arsenal is a failure to understand this key principle.
Capital Deployment
Most investors trade futures the same way as they trade spot… and here lies the fundamental error that eventually ensnares every new futures trader. Calculated capital deployment is at the heart of successful leverage trading. You will never succeed outside of understanding and appropriating this practice correctly. Of course, there is always luck, but that too, eventually runs out.
When trading spot, you can survive any correction. Your portfolio might look terrible. However, you will still have all your holdings… they will just be worth a lot less. Depending on your choice of leverage, as a futures trader, you can only survive so long before your capital is liquidated. There’s no coming back from a liquidation event. On the other hand, buying an asset that collapses is salvageable.
Just look at Solana for example, a recovery rally to $185 followed a collapse to $8. The only way to avoid a liquidation event is by practicing excellent risk management centered around capital deployment. Without this, it is advisable to avoid futures trading. Effective capital deployment is everything in this game. I have been trading leverage for close to 20 years, and if I were asked to name a golden rule, it would be capital deployment.
So, I have made some additions at these levels, as well as set some orders a lot lower, in the event of a flash crash. If you are a trader, you need to learn to plan for failure, as well as success. Many fail because they only plan for success. It sounds counterintuitive at first glance. However, it’s not, nothing goes as planned, or as you would like it to go. If however, you make provision for such occurrences, you will succeed… by planning for failure.
Final Thoughts
When it comes to a long-term leveraged portfolio, I only make additions during market corrections. Several wisdoms make this an effective approach. However, that’s for another day. Enjoy the ride, and if you are taking advantage of this dip, all the best. See you next time!

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Disclaimer
First of all, I am not a financial advisor. All information provided on this website is strictly my own opinion and not financial advice. I do make use of affiliate links. Purchasing or interacting with any third-party company could result in me receiving a commission. In some instances, utilizing an affiliate link can also result in a bonus or discount.
This article was first published on Sapphire Crypto.