Cryptocurrencies are synonymous with volatility. Almost everyone involved in cryptos has experienced the heart-in-your-throat feeling that comes when right after you buy a big chunk of your favorite crypto, the price drops 20–40%. It’s part of the game, right? It doesn’t have to be, however.

Let’s look at my favorite crypto, Kin. For those not familiar, there are links at the bottom of this article to point you to the info. Kin is on a mission to disrupt the Advertising-centric monetization model Social Media companies like ZuckBook and Twitter use, selling our attention to advertisers.

Highlights of Ted Livingston’s May 2018 Ask-Me-Anything (AMA)… the Passion of the Kin!

Okay! Kin is awesome and is going to change the world! But what’s the best strategy to buy into Kin?

Laddering.

Laddering is simply the concept of buying in (or out) of an asset or stock in small batches over time in order to smooth out the ups and downs of that volatile asset.,, in this care, Kin. This is because you and I are not psychic, which means it is impossible to precisely “call the high or the low” price of an asset, or even for certain whether an asset is going to go up or down. It also gets you started right away, and makes sure that any price gains are immediately locked in, while ensuring that any loss due to decline is also minimized.

The idea behind laddering is very basic. So basic, in fact, that it seems too simple to work. But it does, and it works well. Let’s look at two scenarios:

Case A (Impetuous Johnny):

Johnny got his tax refund back from Uncle Sam, and now has $5,000 to buy Kin. Yay! Great scenario, Johnny is excited to be able to finally buy more Kin.

So Johnny buys Kin at the current market, $0.000650. His $5,000 investment brings, after fees, about 7,500,000 Kin. Hooray! Johnny is a substantial bagholder, has a bunch of Kin to HODL and now feels ready for the KRE, the Kinit App, and more Partnerships… now, now, now!

The next week, Kin falls to $0.000350, and Johnny is devastated. His $5,000 worth of Kin is now worth about half that. The following week, Johnny sees the price fall to $0.00015. He goes without lunch and starbucks for a while, scrapes together a few dollars and buys more Kin at the lower price. Could Johnny have avoided this?

Yes. Read on.

Case B (Serious Sally):

Sally gets her tax refund and also has $5,000 burning a hole in her painted-on, designer jeans pocket. She also wants to buy Kin, because she knows it’s going to be the most widely used crypto in history soon, and the price will appreciate significantly. But she has tamed her FOMO (Fear Of Missing Out), and has read voraciously about Laddering in and out of financial assets.

She takes the first $1,000 of her total amount in and buys Kin at $0.000650. Lo and behold, the price drops, and next week, Sally buys another $1,000 worth of Kin at $0.000350. The following week, the price drops to $0.000150, and Sally, ready to buy more, recognizes that this is a near-historic low for Kin, and decides to “up-ladder” her purchase, buying another $2,000 of Kin, and saving the last $1,000 for the next week, when the price recovers to $0.000275.

Sally holds 1,400,000 Kin from the first week’s buy, 2,750,000 from the second week’s buy, 13,200,000 from the third week’s buy, and 3,500,000 from the fourth week, giving her a total of 20,850,000 Kin, safely tucked into her MyEtherWallet. Same investment amount, same crypto, but taking advantage of the volatility, Sally is able to buy more than 2.5x the amount of Kin by Laddering.

So, in a nutshell, Sally gets her Lambo 2.5x sooner than Johnny.

In Case A, Johnny will ride the volatility rollercoaster. Case B shows that Sally will profit from it. But what if the price goes up?

Laddering becomes a hedge against price rises as well. Early purchases act as a foundation for the buy, ensuring that Johnny and Sally take some advantage of the lower price. In a steadily rising market for Kin, this is the safest way to buy in. The early buys ensure you take advantage of the lower earlier cost, but also make sure you aren’t exposed to the possible severe losses a downswing can bring.

Below is a video by Haejin Lee, an experienced Technical Analyst who follows both crypto and other financial assets.