Why your equity curve is key when invested in cryptocurrency

Before we get into the nitty-gritty, I think it’s important to explain what an equity curve actually is.

So what is an equity curve?: Well, my good friend, an equity curve is basically just a graphical representation of the change in the value of a trading account over a certain time period.

An equity curve with a consistently positive slope would essentially tell you that whatever you’re doing as an investor is working, and your investment portfolio is profitable, while a negative slope would indicate that you might want to rethink your current investment strategy.

People spend a lot of time analyzing their individual winners and losers looking for some sort of insight that will help them “clock the game”. “Maybe if I change the settings on my RSI or if I cut my losses earlier, I’ll be more profitable”, and while all of this can be helpful when looking at one or two investments or trades, it’s difficult to get a birds-eye view on your investments as whole this way. Have you honestly maintained the same system long enough to even analyze how minor tweaks could help?

Reviewing individual investments is critical, but even more important is the review of your equity curve. The crazy thing is if you plot your equity curve you will see some of the same patterns that you see in price charts. When you review your equity curve you can see clear as day how you are processing the information presented to you by the market and the effect that’s having on your trading. It is better if you start the review of your portfolio first by looking at the equity curve before you go into each individual trade. This will let you know if it’s really your system or if it’s you sabotaging yourself.

Now you might be thinking to yourself, “I don’t have time to keep track of all my crypto investments”, well I’ve got good news for you, the Moonfolio app can do all of this for you! Moonfolio can be synced with your wallets and exchanges and give you a comprehensive overview of your entire crypto portfolio as well show you your individual transaction history. Check it out for yourself here!