1- Have a solid trading plan

One of the biggest mistakes you can make as an investor is to start trading based on your instincts. We cannot deny that you can get some positive results this way. But this can only be the result of luck. You need a proper plan to manage your risk and achieve consistent results.

Your trading plan is your organized approach to trading. It is a system that you have created with your experience in the market to give you the desired hedge and results. Your trading plan should include things like when you will enter or exit trades, how much risk you should take when making these trades. The fact that all this has been planned makes trading easier for you and helps you manage your money well.

2- Invest only as much as you can afford to lose

This is an often overlooked aspect of investing. Because many investors believe that there will be no ”accident" and that everything is under control

So why should you follow this rule? There is a simple answer to this: because you can lose your capital. Also, trading an amount that you can't afford to lose will result in pressure and emotional stress that can compromise your decisions and lead to more mistakes.

The cryptocurrency market is volatile. Therefore, it is better to trade with only a small amount of your income. While losing money is already painful, losing money that you need is even more painful. Therefore, this crypto risk management item is quite critical.

3- Size up your positions

The idea behind position sizing is that you need to measure how much risk you are taking per trade. You should not risk 100% of your capital in a single transaction. Successful investors prefer to risk a fixed percentage of their capital per trade.

Some trading experts recommend that investors, especially beginners, should not risk more than 1% of their account balance on a single trade. This application will help you limit your risk and allow you to have control over your trading capital. Some investors consistently take 2% risk per trade, while others take 3% risk per trade. Some also believe that no more than 5% of their capital should be involved in open transactions, no matter how many opportunities they see.

Unexpected price fluctuations happen in the market. If you risk more than you can handle, such fluctuations can cause you to panic and push you to make irrational decisions.

4- Limit the use of leverage

Leverage allows you to trade using borrowed capital. As a result, your profits may grow, but your losses may also grow. You need to thoroughly understand how leverage works, its impact on your trading results, and how you can best manage it.

Futures traders usually tend to use very high leverage in order to be able to make a lot of money. But unfortunately, they forget that a small mistake can also lead them to deep losses.

5- Always calculate your risk-reward ratio

The risk-reward ratio corresponds to the expected potential return from a trade versus the risk. You should measure the risk-reward ratio of a transaction before performing a transaction. This is an important part of crypto risk management. If you can determine the potential outcome against the risk, you will be more likely to go for transactions with a high probability of success.

When calculating the risk-reward ratio, investors usually choose a ratio between 1:1.5 and 1:3. Dec. a ratio of 1:1.5 means that the profit target will bring in an amount that is 1:1.5 times greater than the risk. while it is said that any trade that ends at 1:1 is head-to-head because there is no profit or loss, any trade that shows a 1:1 risk-reward ratio should not be made.

6- Use a stop-loss order

The stop-loss order helps to determine an exit point in the market. It limits your losses when a trade contradicts your prediction. At some point you will have losses and there is nothing you can do about it. Every time you make a trade, you can check the losses by using a stop-loss order.

Some people believe that they don't need to put a stop-loss because they know the right time to exit the market. However, they forget or do not know that the market is full of surprises and they can be easily distracted. In October, the lack of a stop-loss order makes it difficult to determine in advance the amount you will lose on a bad trade.

A stop-loss order ensures that you do not exit transactions too early and do not miss out on potential profits. They also protect you from emotional trading and situations that can lead you to make bad decisions.

7- Secure your profit with take-profit

Take-profit works in a similar way to stop-loss. The main difference is that it is not used to secure a profit and stop a loss. The tool is designed to make a profit when the price reaches the specified point.

Having a clear expectation for your trading profit helps you determine in advance the appropriate risk that you should take. It will also help you maintain discipline during the procedures.

8- Have realistic expectations

Having realistic expectations is the key to crypto risk management. You can't make a 40% monthly profit without risking your capital too much. Having such a goal will always cause you to overtrade or use too much leverage. This can also cause huge losses. Setting more realistic goals will help you gain control over trading emotions such as greed, fear, and hope. This rule is very important because when learning crypto risk management methods, you also need to prepare your psychology.

Importance of crypto risk management Crypto risk management is very important to be successful in trading. It should be taken seriously by investors who are just starting out and are in a difficult situation. In fact, not applying these methods, which are quite simple, can cause you to fall into difficult situations.

The difference between successful and struggling investors is not always the trading strategies used. Dec. The main thing is related to the simplicity of the methods they apply. Successful investors usually create their trading plans quite simply. Thus, they make a profit with consistent crypto risk management. #crypto2023 #BTC #ETH #crypto #Binance