Manage your crypto portfolio easily with this step by step guide, from your desktop or cellphone. ACCOINTING.com is a platform made by crypto traders for crypto traders and we know your needs and desires.
As a crypto trader you want to:
1. know your overall portfolio performance regardless of where his cryptocurrencies are located
2. understand the possible opportunities in the market for investment easily and accurately
In order to do all of that, handling cryptocurrency has to be simple, fast, reliable, accurate, safe, transparent, affordable, and user-friendly. All the right variables need to be in the right place doing the right thing at the right time with a specific purpose. We managed to that. Here’s how:
Table of contents
- Manage Your Crypto Portfolio
- a. Strategies
- b. Risk Management
Manage Your Crypto Portfolio
i. The classic buy low and sell high
Use the summary chart to analyze your coins to determine when is the best time to sell or buy positions.
ii. Take advantage of your portfolio’s allocation
After doing market research, you can use the portfolio’s allocation to refund your winner position using your neutral positions. Make sure you’ve done your Technical Analysis and Fundamental Analysis before making a decision. This strategy is for using your portfolio value instead of adding funds.
iii. Taxes strategies
Buy at different price points to reduce the average purchase price depending on the tax method. Read the crypto taxes guide for a deeper understanding.
Realizing a loss can help you to reduce your taxes by reporting fewer gains. For a better explanation, imagine you want to use $10 to pay a Netflix subscription with crypto, and you have invested in ADA and ETH, so you have this situation:
As you can see, you gain $14 with ADA and lose $2 with ETH on unrealized gains. If you realized the $2 loss for getting one month of movies paying it with ETH, you have to report a negative income. Therefore, you have taxes on your side with a loss that doesn’t represent anything because your investments are still $12 profit.
Long term gains / Organize investments with wallets
The holding period it’s an important topic when you’re thinking about using your gains and losses for purchases or trades to FIAT. Generally, long-term gains (more than a year) charge fewer taxes compared to short term. Therefore, this strategy consists of keeping your crypto that you plan to hold separate from your trading accounts to have an organized portfolio. Change the name of your wallets depending on their purpose. Always put your holding positions into wallets.
iv. Take advantage of ACCOINTING.com’s App
Analyze attractive cryptocurrencies on the Market section, and put a price alarm whenever you feel a good time to place a position.
b. Risk Management
i. Hold positions using wallets instead of Exchanges
When you have crypto in Exchanges, you aren’t entirely the owner of the private keys each coin has. Similar to a bank, you’re trusting the Exchange to keep your money safe. Also, you are exposed to be hacked, so it’s better to keep your crypto in a hot/cold wallet.
ii. Diversified your portfolio
Diversification is one of the pillars when you are talking about portfolio management. It’s the best way to reduce risk and helps you to keep the probabilities in your favor. Imagine you have 100 USDT that you want to invest in crypto A and crypto B. These assets follow the subsequent behavior:
|Cryptocurrency||Month 1||Month 2|
|A/ 100 USDT||100% / 200 USDT||50% / 100 USDT|
|B/ 100 USDT||50% / 50 USDT||100% / 100 USDT|
If you invest 100 USDT in just one cryptocurrency, you’ll end up with the same balance. Now, imagine that you invested 50 USDT in cryptocurrency A and 50 USDT in cryptocurrency B:
|Cryptocurrency||Portfolio allocation||Month 1||Month 2 *|
|A||50%||50% * 100% = +50%||50% * (-50%) = -25%|
|B||50%||50% * (-50%) = -25%||50% * 100% = +50%|
*: For this example, the portfolio gets reallocated after month 1, so it will always be 50% asset A and 50% asset B. In other words, you use 25% of asset A to buy 25% of asset B.
You’ll end up with a total of 150 USDT by diversifying your investments. On the other hand, you can use this knowledge when you’re holding a position. For instance, you want to buy a long position for DOT with 100 USDT. You can diversify your investment by purchasing DOT at various price points: