How to Invest in Cryptocurrency with the “Little Old Lady” Strategy
As you dive into the world of money management, investing and trading, you’ll uncover the concept of ‘Risk’. Down the rabbit hole of Risk Management, you realize it’s the giant sleeping beast of investing. The Little old Lady strategy is perfect if you want to learn how to invest in cryptocurrency and stocks with a low-risk approach.
When your focus is profiting through quick trades, swing trading, and other forms of buying-low-selling-high, you must follow perfect risk management and achieve a high win percentage in order to stay profitable.
How to Invest in Cryptocurrency Using the LOL Risk Management Strategy
The Little Old Lady strategy is not a trading method, at its core, it’s a risk-management strategy. The most risk-averse, i.e., the strategy that avoids the most risk, would be the Little Old Lady. You can imagine her now, sitting in a comfy sofa chair sipping on her tea, adjusting her glasses, and not wanting to lose money or stress about complex risk management.
The Rational Investor education programs teach strategies for the many types of risk traders. The Little Old Lady (LoL for short) is the most risk-averse investor that takes part in the market. They don’t want any risk, worry, or fear of having a trade get ‘stopped out’.
To understand this risk-management strategy in more detail, we must look at the two fundamental investing rules we follow at The Rational Investor.
At TRI we have two simple rules for investing:
Rule #1: Follow an algorithmic system that produces a 2:1 reward for risk and is correct 60-70% of the time.
This means that 60-70% of your trades are winners, and you’ve risked 1 ‘amount’, for the potential reward of 2 ‘amount’. Over time, this means you’re a profitable trader, where losses are smaller than wins and happen less frequently.
Rule #2: Never risk over 5% of your stake/capital on any one investment idea.
The second TRI rule is all about risk management, and considering your tolerance for risk, you can play with this rule. Risk-takers in the marketplace manage this rule by using leverage on a large piece of their stake (taking a big bet, with potentially greater rewards), but if the trade goes 5% into the negative (of the full stake’s value), then they must close the position.
If you’re learning how to invest in cryptocurrency, then try the low-risk Little old Lady strategy to trade in the market. In the TRI Silver Membership program and the TRI School Program, you’ll get more details on this setup and many more, along with fundamental and technical training to help you become a rational investor and learn how to start a small business of profitable trading.