Diversifying your assets is essential for increasing your earning potential and managing risk. Think of it as not putting all your eggs in one basket; instead, you're investing in various businesses with your capital. This way, if one investment underperforms, you still have others to rely on, avoiding the pitfalls of overdiversification which can reduce overall returns.

As a full-time trader and investor since 2019, I want to share my approach to managing my portfolio. This strategy has allowed me to make a living from the market. Here's an overview of my allocation strategy: I allocate 50% of my portfolio for long-term investments, 30% for active trading, and 20% for what I call "Emergency Liquidity." Let’s break down each component before delving deeper:

Long-term investments: This involves accumulating assets without stress, especially during market dips, through techniques like tranching or dollar-cost averaging (DCA), which will be discussed in later articles. 

For instance, we can make significant gains by accumulating Bitcoin (BTC) at $10,000 to $11,000 in 2020 and selling it at $60,000. We can re-accumulate during the next dip at $15,000 to $23,000 by 2022, which has yielded excellent returns, as BTC recently hit a new all-time high and is currently at $67,000 at the time of writing.

Active trading: This involves daily trading activities to capitalize on small market movements, maximizing earning potential. We make profits by longing or shorting the market through day trading and scalping.

Emergency liquidity: This is a reserve of funds ready to be deployed when the market dips unexpectedly. It allows you to accumulate more assets before they recover, increasing your potential return on investment. This reserve reduces the stress of timing the market perfectly and enhances your trading efficiency.

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In the next articles, we will dive deeper into each of these components, dissecting each part thoroughly, discussing strategies, techniques, and real-world examples to help you manage your portfolio like a full-time trader. 

This article was made by Rod Stephen Codilla a.k.a ProfLokiCrypto Channel to learn more about my insights and teachings about trading and the markets.