Risks are inherent or always there whenever we talked about investment especially Bitcoin and the whole cryptocurrency community. But how do you deal with these risks? What are your experiences or even techniques in managing risks? In minimizing risks or even eliminating it?
Without the control of its risks, it is very difficult to become a successful trader in the crypto currency and in General everywhere. When it comes to trading cryptocurrencies, the importance of this increases even more, as this market is very volatile and full of surprises. Controlling your risks by more than 60% guarantees you success.
No one has certain rules and requirements, they simply do not exist, because each scenario requires an individual approach. Each trader develops it in accordance with their views on the market, trading plan, mood and goals and emotions.
One of the main things that can destroy all the profits of the trader is greed. When you see that the price rises higher and higher, it is best to close this position, but here it comes - Greed! Everywhere the forecasts for further growth, profit and exultation, but here lies the main catch! It should be clearly understood that the stop is sure to be. Be sure to come correction or collapse and then you will regret that you have not sold your position on time. So it happens in 95% of the case I guarantee it! Therefore, if you are a trader, not a long-term investor, you need to gradually fix the profit without waiting for the collapse. The exact moment depends on the fuel supply of the coin and your ambitions.
Always take profit in small parts, one thing is for sure: sell should be on the way to the top and not on the way back down the slope. Do not try to sell the entire position at the top - you are unlikely to succeed. If you are not able to watch the rally in real time, place sell orders in advance.
Don't forget about diversification.
Another key aspect of risk management is the diversification and size of the portfolio, never invest all your money in one asset, no matter how awesome it may seem, no matter what promises its development team makes, and no matter what the excitement around it flares up. This may be a deliberate trap and you will fall for it. Never go all-in!
In a secure portfolio, capital should be distributed between at least ten different coins, preferably more.
Another important rule: one coin should not account for more than 10% of your portfolio. In exceptional cases, if the coin grows at an incredible rate - up to 20%. If the price rises higher and higher, it is sure to end sometime. Therefore, it is advisable to sell such a position on the way to the top and switch to looking for another coin with the best risk/profit ratio.
Be careful and trade with your head, I hope all of us will succeed!!