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Dealing With Opportunity Costs

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@metapiziks
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Opportunity cost is something we "argh!" about or something that probably would have made us say all the expletives ever sworn when we realized something we could have had had we chosen the other option. Some say it's not a real cost because it is something unforeseen. But the thing is, you had the opportunity to choose that option and it slipped by you.

For example you had like $5,000 and you wanted to invest on a cryptocurrency back in mid of October 2021. Let's say you wanted to get into crypto because you believe that blockchain games are going to explode in the future so you researched about metaverse coins and your final two coins to choose from were Sandbox and Mana and eliminated the rest for consideration.

Finally after some digging around you are finally looking at the top two metaverse coins but now your dilemma is which one should you put your $5000 into. At that time both coins were on the $0.70 - $0.80 levels.

Now say you chose Mana and poured all of your $5,000 on it. Then at the end of the month of October 2021 the metaverse talks went from murmur into a frenzy sending all coins with a metaverse tag attached to it to really skyrocket.

However, you were not happy even though your Mana went to an all-time high (ATH) of $5.91. You're cursing and throwing tantrums because Sandbox shot up to its ATH of $8.33.

Although you made a ludicrous amount of money too with Mana yet you are angry because you missed out on $2.4 profit per coin or an extra rough estimate of $9000 of extra profit. I'll admit, personally too, losing $9,000 is kind of infuriating to think about, right?

Basically, opportunity cost is lost opportunity since like you had the power to choose or grab that opportunity and yet you chose another option. I think this happens a lot of time in crypto trading because we just don't know which would fly higher unless you have a whale friend who would whisper to you, "buddy, buy this and that now, 'cause I'm gonna pump it up."

So how do we manage minimizing opportunity costs?

To be honest, there is no clear cut answer to this. Should you go for a straight up buy low and sell high approach, you are bound to have lots of wasted opportunity because we do not know exactly when and which ones are going to go rockets a-blazing to the moon. It's always going to surprise you like you can wake up with a coin doing 500% or $5000.

Perhaps I could advise you to just be tough enough to face those times when we made a wrong judgment call because that's what I did.

However, based on my experience from crypto trading, I can somehow share a bit as I've had my fair share of lost opportunities, but this is only from my point of view, so be forewarned, as experiences may differ to each person or perspectives may differ for each person even with same experiences.

For me, most lost opportunities happened in the form of selling so soon. Like I had the coin in my wallet but sold for 30%, 40%, 50% to 60% gain. Another common occurrence of lost opportunity is selling so soon because you had the option to hold or sell. I had thought before that 30% to 60% gains were quite high already but then later on I'd be dumbfounded to see those coins I've sold shot up 300% or 2000%. Argh!

With Dogecoin, I sold days before Elon discovered tweeting crypto coins. That was really a big "argh!" for me.

So I had my profits and losses. But somehow I keep selling so soon, and I could have made more. Somehow I have to change how the way I was trading because I was losing a lot in terms of opportunity costs.

Finally, I came to a realization that there is only one thing to do to curb off opportunity costs, and that is to hodl longer. I realized I have to have a strategy where I can hodl and trade at the same time. So change my strategy is what I did.

I had a clean reset of my portfolio after the big crash when BTC went down from $20k to $3k. From there on I was able to change my portfolio into 50% hodl and 50% trading. I call my portfolio 50% logic-50% ego.

Logic dictates I should hodl and my ego dictates I trade because I am good in timing the volatility of prices. Imagine I had BTC at $1500, I had XRP at 15 cents, I had Doge when it was the shittiest of all coins back then, and I had LTC when it was $4. I could have gotten BTC earlier but it was hard to buy it back then and it was already $1,500 when I figured out how to acquire BTC.

But looking back, no one would have believed anybody had anyone said back then BTC is going to be $50,000 or Dogecoin will become 77 cents. I sold my BTC at $3000. That was 100% and so proud back then.

Photo by Caleb Woods on Unsplash

Now, I cringe at the thought.

Yet, the future is really leaning towards cryptocurrency and newer and more innovative kind of blockchains have come out and will come. With the lessons I have learned from experience, and which I am sharing to whoever is reading this, I say opportunities are aplenty.

Pick a coin with a good technology behind it or rather think if it's going to be useful for mankind, buy it, and hodl. The earlier you get in the better or when a great correction happens that is the time you can get a good price to enter and hodl.

If you've read all the stuff I've written about previously, particularly the ones about trading strategies, those are things I'm actually doing right now in parallel with my hodling. I have one coin hodling and the rest I am just playing around with just so to be kept abreast of the trends in crypto and to force me to observe the vicissitudes of the market. For me, I guess a balance of logic and ego is needed to ward of temptations and moments of indecisions.

Thank you for reading this far. Hodliskey!!!

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