To take inspiration from "The Wolf of Wall Street" for a moment:

In the last 30 days I made $29,514 trading Crypto currencies and that really pissed me off,

because it was $485 short of a thousand bucks a day.

I mentioned in a previous article that I had long been against cryptos, but had a bit of a "Road to Damascus" moment in mid-November and decided to diversify my portfolio with the addition of some crypto-currency exposure.

Initially I planned to allocate 5% as this was an amount I could lose without too much bellyaching. The past year has seen a substantial rally in equities and I felt more at ease putting some of that into something speculative.

As chance would have it, I was waiting for a repayment on some money I had loaned out, and fully planned to throw that into bonds and gold to wind back the aggressiveness of my portfolio.

However that repayment was slow in coming, leaving me not enough money to rebalance exactly as I would like, but too much to leave in cash for another month.

This was part of the reason behind the gung-ho spirit that lead me to throw some money at cryptos.

20th November 2017

Initial purchase:

| Position (Size) | Item | Cost basis (USD) | Present Value (USD) | |-----------------|------|-------------------|---------------------| | 16 Shares | COINXBE:SS | -$6,507 | $6,624 | | 175 Shares | COINETHE:SS | -$6,418 | $6,455 |

I sat on this position for a couple of days before I realised something I had recently highlighted on this blog, namely the importance of currency hedging foreign investments.

Whilst Bitcoin and Ethereum have the majority of trade in USD, and the ETN's that I purchased above track the USD price and convert it into EUR, I was still showing a currency conversion loss on the securities within my brokerage as they are traded in EUR.

Because I purchased the securities in EUR, using my brokerage account in USD (and the ETN seemed to not efficiently reflect the EUR/USD) I took out a short position against EURUSD to currency hedge the investment.

22nd November 2017

| Position (Size) | Item | Cost basis (USD) | Present Value (USD) | |-----------------|------|-------------------|---------------------| | 16 Shares | COINXBE:SS | -$6,507 | $6,475 | | 175 Shares | COINETHE:SS | -$6,418 | $6,448 | | €10,000 | EURUSD | -€10,000 | $11,823 |

19th December 2017

Final positions:

| Position (Size) | Item | Cost basis (USD) | Present Value (USD) | |-----------------|------|-------------------|---------------------| | 31 Shares | COINXBE:SS | -$13,771 | $28,264 | | 312 Shares | COINETHE:SS | -$15,041 | $26,636 | | €30,000 | EURUSD | -€30,000 | $35,522 |

For a profit of:

| Item | Open Positions | Closed Positions | Total | |------|----------------|------------------|-------| | COINXBE:SS | $14,493 | $1,329 | $15,822 | | COINETHE:SS | $11,595 | $2,038 | $13,633 | | EURUSD | $107 | – | $107 | | Commissions, FX, etc. | | -$47 | -$47 | | Total | | | $29,515 |

Cryptos are quite a wild ride, and I was mostly lucky to have got in at the right time and ridden an upswing in the price.

I intend to sell off a part of my crypto holding and dial back my exposure to around 10% with the proceeds going into building up an allocation of bonds.

The last 12 months I have been 100% equities – and now cryptos – which have done very well, but this bull market is getting a little long in the tooth and I've strayed too far away from my original investment plan.

As hard as it is to sell off assets that are rapidly growing, it's time to force the discipline of re balancing to my target allocations.

I'll stay net long on cryptos, but taking a chunk of money off the table will give me back my mental health and, hopefully, not have me waking up in the middle of the night to check GDAX for the latest mid-market price of Bitcoin and Ethereum.