💰 What is Capital Allocation? And how to invest wisely?
Capital Allocation is the art of distributing your money among multiple trades or assets with the aim of reducing losses and achieving a balance in profits ⚖️
🔹 Why is it important?
Because if you invest all your capital in a single trade and lose it, you will lose everything ❌
Whereas capital allocation allows you to control risk and breathe comfortably regardless of market movements 📉📈
✨ Examples of simple strategies for capital allocation:
1️⃣ Advice: 1%-2%: Do not risk more than 1% to 2% of your total capital in a single trade.
For example, if you have $500, do not risk more than $5 to $10 in a single trade.
2️⃣ Portfolio division by risk level:
50% in stable coins or strong, long-term projects (like $BTC, $ETH).
30% in medium-risk coins (emerging projects but reliable).
20% in high-risk coins (DeFi or meme coins with doubling opportunities but not guaranteed).
3️⃣ Emergency reserve: Always keep 10% of your capital unused, for sudden crashes or golden opportunities 🧯💼
🎯 The smart one is not the one who makes a lot of profit, but the one who knows how to protect their capital!