As previously discussed, the two main investment approaches are ‘return oriented’ and ‘loss conscious.’ Alpha and Beta. You can take our simple test to determine just how risk-averse you are. Since the Alpha Beta test launch, I have spoken personally to several clients — with revealing results. Many strongly identify with one type, to the degree that they are genuinely surprised to learn that a second type even exists.
Others cannot easily identify exclusively with one type, desiring both types of portfolios simultaneously. There is also a third group – the Super-Alphas* – who want to realize the dream! They seek ten-fold, one hundred-fold, and even one thousand-fold returns on their money. They are neither gamblers nor lottery players. They are simply sensitive to the probability of such outcomes. That’s why they’re following and allocating to cryptocurrency.
Last year the probabilities of realizing 10,000% returns simply by investing in majors were overwhelmingly high, seriously outperforming stock markets.
I have to admit that I am drawn to the cryptocurrency market because of this dream. But I love my Beta side too, and always have my capital spread across all three portfolios – Beta, Alpha, and Super-Alpha.
I want to quickly mention three ways in which Super-Alphas can achieve 10x returns.
#1 Trade with professional high-frequency systems.
If you are part of a closed circle of professional traders with stable systematic strategies, returns are bounded only by the size of your account.
#2: Trade high-leverage markets with professional systems.
This one’s simple. Take forex with 1:100 leverage. One good signal, and you’ll have 10% of the market move. One good signal doesn’t necessarily involve a 50-50 probability of course, but it can be high enough in certain situations when extreme market moves are expected due to fundamental economic changes.
#3: Invest in highly volatile markets with aggressive money management and professional systems.
Here comes cryptocurrency, with the possibility of catching three moves, and each time potentially doubling your investment while experiencing acceptable drawdowns during choppy market phases.
On a cautionary note, I reiterate my previous disclaimer: that slow market phases, slippage, order execution, exchange failures, and many other things in young cryptocurrency markets can strip you of capital before you get a chance to profit. So, remember the golden rule: Only invest capital you can afford to lose.
I’ll end by challenging you to suggest more ways to capture the super-alpha holy grail. Remember, I am not talking about the lottery (extremely low chances of success) or casino games like Roulette, where the chances of doubling three times in succession are (18/37)^3=11% — still far from 50-50.
Also, investing in ICO’s can be troublesome. From one side, 1000x was achieved by Stratis in a couple of years. But how many like these are there, even if we consider retrospectively solid ICO’s only? This will be our team’s project this upcoming quarter.
(*Note: As to be expected, there are no Super-Betas in the cryptocurrency environment.)