1. Take The 100% Cash Test
To optimize your portfolio allocation, at least to the best of your ability, ask yourself this critical question:
—If your portfolio were to reset to 100% USDT today, would you choose to reallocate funds exactly into the same positions you currently hold?—
The answer for most people is probably not. Yet, many struggle to act. Why? Because of these psychological barriers:
• The Sunk Cost Fallacy
• Emotional Attachment
• Fear Of Being Wrong
The Sunk Cost Fallacy is the cognitive bias where people continue to invest time, money, or energy into something simply because they've already invested in it, even when it's no longer logical (this can also apply to relationships, projects, etc).
In trading, this means holding onto underperforming positions because you've already "spent so much" on them—whether financially or emotionally—rather than cutting losses and reallocating to better opportunities.
Ask yourself the question. If the answer is no, you need to act.
It can feel overwhelming at first, but start small, with 1 position: ask yourself if you would buy that exact amount of that token today. Then go with a 2nd one.
Selling is emotionally difficult because it feels like closing the door on potential. But clinging to positions based on hope or fear leads to stagnation and poor judgment.