Risk prize indicators in cryptocurrency investments
In the world of cryptocurrencies in recent years there has been a meteorial increase, and prices are rising to an unprecedented level. However, this trend also attracted a wave of amateur investors who want to accept. Although some people received significant profits by investing in cryptocurrency, others lost significant amounts. One of the key factors determining whether the investment is worth taking risks is
the risk beam coefficient .
In this article, we will deepen the concept of risk relationship and provide a comprehensive assessment of how it is calculated for cryptocurrency investments.
What is the risk factor?
The risk beam indicator is a simple but effective tool that helps investors assess the potential invested return on investment (ROI) compared to the risk associated with the asset. This is calculated by sharing fees or profit based on any loss or risk. The high risk of the prize shows that you can expect more than one dollar for each dollar invested.
How to estimate the risk prize indicator in cryptographic investments
To assess these steps in accordance with the risk of cryptocurrency investment risk:
- Set your investment criterion : Before placing in any cryptocurrency, define investment criteria based on such factors as price strength, market value, trade quantity and special assets you want to invest.
2 they are often called the «high, high prize» property.
3 for example:
* If you invest $ 100 and expect a 10%return on capital, the potential profit would be $ 10.
* Calculate the risk factor, sharing the potential profit (USD 10) with the original investment (100 USD):
+ 10% / 100 = 0.1 or 10%
4
* For example, if you invest $ 100 and want to reduce the risk by 50%, the new investment rate would be 50 USD.
* Calculate the risk factor by sharing a potential loss (50 USD) with the original investment amount (100 USD):
+ 50% / 100 = 0.5 or 50%
- Consider market conditions : Remember that market conditions may vary significantly, which affects the cryptocurrency ratio. For example:
* If the prices are very unstable, predicting future price changes can be more difficult.
* If you invest in a high market and trade cryptocurrency, you may have less price fluctuations.
Example: Placing $ 100 in Bitcoin
Let’s say we want to invest $ 100 in Bitcoin. We define our investment criteria by buying the first 10% of total production (28 million coins) at the current market price of USD 20,000 per coin.
- Our initial investment is 100 USD.
- The expected return on investment in the invested capital would be $ 2,000 ($ 20,000 x 0.1), which is a return of 200%of the invested capital.
- If we reduce the desired risk level by 50%, the new investment amount would be 50 USD (10% of total supply).
- Calculation of the risk beam indicator by sharing all losses (50 USD) with the original investment amount (100 USD):
+ 50% / 100 = 0.5 or 50%
application
The ratio of the risk beam is a key tool for risk assessment and a potential reward for cryptocurrency investments. By calculating the return from the invested capital compared to the desired level of risk, you can find out where to invest and how much to invest in throwing encryption.