Risk management , how ?

[Jhonyguy]

successful trading is about managing risk minimising it as possible  as we can , i have read that with correct risk management even with flipping a coin we can do trading and be profitable

i want to know what methods/rules  are there to minimise risks

[1714798493]

1714798493

[TheUltraElite]

successful trading is about managing risk minimising it as possible  as we can , i have read that with correct risk management even with flipping a coin we can do trading and be profitable

i want to know what methods/rules  are there to minimise risks

1.You can minimize risk by reducing the size of your portfolio.

Risk comes from the volatile altcoins that people become enthusiastic about and move on to those from bitcoin. They forget that bitcoin is what is going to be the biggest coin in the future and fall for the false promises of some shitcoin. So reduce your portfolio and keep bitcoin to the maximum if not 100%.

2. Move to other sectors that just cryptocurrencies. But this depends on your expertise. This helps mainly during the times when crypto is dumping and other market are rising.

3. The internet is full of paid media articles. Stop reading them and the reddit channels on crypto. Its more like breeding grounds for waste of time conspiracies there. Use your own research to develop your own charts and use them to buy/sell and observe how you progress.

Remember that trading is not everyone's ballgame. You may fail at which point it is wise to quit.

[Wexnident]

Do note that risk management is not a way to stop losses, but to minimize losses as much as possible. This doesn't mean that you would never take losses. There would naturally be times you would and the plan is to lessen the losses you could incur.

Some tips with Risk management is to always be alert regarding the changes in the market. Learn to determine whether a sudden pump is good news or bad news for you. There's also the idea of spreading thin your portfolio, so even if you do lose in every avenue, the losses are minimized since its pretty much distributed, compared to concentrating on one coin. The vice versa could be done as well, BUT you must be able to determine that the coin you would invest in would profit.

[milewilda]

successful trading is about managing risk minimising it as possible  as we can , i have read that with correct risk management even with flipping a coin we can do trading and be profitable

i want to know what methods/rules  are there to minimise risks

When we do talk about minimizing risk then there would be lots on the list.

1. Never be greedy
2. Set a specific goal/profit on a certain trade.
3. Dont chase losses
4. Set stop loss
5. Dont get fomo'ed or shilled out.
6. Dont be emotional.

These are only the basics but actually a hard thing to be done.

[wwzsocki]

As you can see OP from all answers above, risk management is a hard thing to explain and to be honest with you, all these answers are good and could be seen as a risk management for different, let's call it "earning strategies" - trading, investing in ICO, gold, etc.

Risk management - (in my opinion) word to describe actions taken against losses.

As you said OP,

successful trading is about managing risk... i have read that with correct risk management ... trading and be profitable...

you have read about it and now wonder, what that is and how to apply it to your trading to be profitable?

Already one member answered, that you shouldn't be doing this, which is: "read to much BS on the internet".

...The internet is full of paid media articles. Stop reading them and the reddit channels on crypto...Use your own research to develop your own charts and use them...observe how you progress...

This is really great advice because you can't apply risk management strategies from an article (written by a billion-dollar hedge fund manager) to your trading, this is something totally different, but as you can see, it has the same name.

The first and third answer, both good for every day trader (especially the third one),

1. Never be greedy
2. Set a specific goal/profit on a certain trade.
3. Dont chase losses
4. Set stop loss
5. Dont get fomo'ed or shilled out.
6. Dont be emotional.

OP, you can apply this to your trading to minimize risk and this would be good risk management, I hope this starts to slowly be clear?

If not, I will share what I personally do lately, to manage my risks in trading. I started to use, these new Binance pairs BULL, BEAR, ETHBULL & ETHBEAR when I try my luck with day trades or even swing trading. I try to hedge against (not so much) the risk itself, but the market volatility, especially, when on BTC and there could be FOMO in play (big news or event).

If you don't know what BULL, BEAR, ETHBULL & ETHBEAR is, here a short read: https://www.binance.com/en/support/articles/360038933471

As I already mentioned, when I am day trading and there is a big chance for the price of BTC to go up or down fast, I like to bet 15% on BULL or BEAR to hedge against the risks and market volatility, when I am gambling with more money than usual.

As you can see, everybody has to develop his own risk management strategy, which will be perfectly suited to what one is actually doing. I needed also a lot of time to understand it and be able to implement it to my trading and now I concentrate on how to maximize profits because everything is in our minds and if you will keep thinking about risk and losses, it could end up that way, despite best risk management strategy  .

[maydna]

Perhaps, you don't have to be greedy in taking profit so you can minimize the risk of losing the profit because we don't know if the price will increase more than the price now. It is better to close the trade by getting the profit while we still see it before the price goes down because after the price hits the higher price, it will go down, and sometimes, the price can get dump too deep. So before the situations change, we can use that time to sell the coins and wait for another time to repurchase the coin if the coin has the potential to increase back.

[Ryker1]

Well, every one of us has a technique and ideas about how to manage the risk. To be specific, we should have self-discipline in trading because it is a sort of gambling that perhaps you have to lose or win. The most important is to spend an amount that you can afford and that included not to become greedy at all. Next is, accept losses and never chase it and hoping to cover your entire losses because it will probably end up nothing if you continue doing that. Another one is stopping loss and take profit, diversification into stable coin is the best way to cut the losses. Indeed, research your own and dont rely upon other's suggestions.

[bitbunnny]

First of all you have to be aware of your limits. Whatever you do, don't invest more than you can affor to lose. Always diversify your investment and never get greedy in times when you are doing good.
Don't ever treat trading as a gambling and don't rely on pure luck, that is a trap. And always be aware that you can't predict every situation and that surprises, especialy negative ones, are always possible.

[1Referee]

Always diversify your investment and never get greedy in times when you are doing good.

This isn't the stock market. In the stock market you can choose between various industries and invest in real companies.

In crypto you can choose between Bitcoin and a ton of shitcoins. I wouldn't recommend anyone to buy shitcoins unless you accept that there is a very real possibility that you lose most of your money. If you purely focus on the charts, then it's clear that apart from a few newer coins, Bitcoin throughout the years has done better than the rest of the crypto market.

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I have zero risk management when it comes to my hodl stack, but have strict risk management for my speculation stack. I set myself target levels as to where I want to be out of the market, and this usually works pretty well for me. If needed, I'm happy to take a small loss in order to prevent further losses.

Furthermore I closely monitor the daily moving averages and enter/exit positions based on what I deem a change of behavior. My current position is well in the profit, but will exit the moment the price has closed or is about to close below the 21EMA. In this case I do not have a target level in mind to cash out at. I'll ride this run out as long as possible.

[hahay]

Basically, risk management is more for controlling yourself like keeping emotions, with you can control emotions so you will not panic and get greedy in trading. That way you will trade even better when facing prices that suddenly decline and suddenly increase, there is no need to make choices based solely on rumors because of the possibility of the market moving in the opposite direction.

[Freddy11]

Risk management always is a tough deal because we always feel to just go for little bit extra risk and that often turns out wrong. So for me the biggest advantage is FreshForex broker. Since through them there is 101% Tradable Deposit Bonus and that enables great working for me.

[Oceat]

Basically, risk management is more for controlling yourself like keeping emotions, with you can control emotions so you will not panic and get greedy in trading. That way you will trade even better when facing prices that suddenly decline and suddenly increase, there is no need to make choices based solely on rumors because of the possibility of the market moving in the opposite direction.

I agree with you that most of the time risk management is more on controlling yourself than following what the other says because in the first place you are the ones who is controlling the outcome of your choices. The more you get an experiences from your past the more you will know how to become a trader or to manage the risk of every investment you've made.

[darewaller]

Best case of risk management would be basically preparing yourself for any movement at all, if you think bitcoin might fall you should do stop loss in order to stop from losing basically, the name gives away what it does, that way if you think bitcoin fall under certain support level and it may go even lower after that, you can put a stop loss right under the support level so if it ever reaches under that you will sell and when it goes even lower you will buy more.

You can do exactly the opposite on the other side as well, meaning if you think price will continue to go up after breaking the resistance, you will have a buy order there and as soon as it goes above that price you will buy and sell when it reaches the next resistance level, that is how it works for risk management.

[Oasisman]

~snip~

When we do talk about minimizing risk then there would be lots on the list.

1. Never be greedy
2. Set a specific goal/profit on a certain trade.
3. Dont chase losses
4. Set stop loss
5. Dont get fomo'ed or shilled out.
6. Dont be emotional.

These are only the basics but actually a hard thing to be done.

Indeed very basic guidelines, but It's actually harder than you though it would be.
Greed has always been chasing before us, It's unavoidable not to be tempted by greed, specially we're dealing with money here. That's where the greed starts.
Not chasing losses and setting stop loss is somehow a character than can be easily obtained by any experienced traders. While, FOMOing is inevitable too when greed takes over you, and not only those traders with low experience could be fomoing but also the very experienced ones.
Emotion is always there, as human being, that can't be avoidable.
Sure this would really help to manage the level of risk and pressure, but then again, it's really hard to contain.

[The Cryptovator]

First thing you need divided your portfolio to different coins, means don't put your money in one basket. I will suggest at least trade with 4/5 coins (according to total portfolio). So even a coin start dump then you will not loss much.

Second thing use stop loss, if a coin start dump after you bought then sell in maximum 5% loss. Then wait for more down, and when you think should re enter then buy again. By this way you can increse your portfolio. Although its quite risky but no any other way if start dumping your bought coins.

Patience is most important on the trading. Besides greed is most dangerous as well. So you have to care about patience and greed. If you have good profits then just sell, its not necessary to wait for more gain. Who know if coin start dumping. So something is better than nothing.

[CryptopreneurBrainboss]

First thing you need divided your portfolio to different coins, means don't put your money in one basket. I will suggest at least trade with 4/5 coins (according to total portfolio). So even a coin start dump then you will not loss much.

I won't recommend this suggestion since it has to do with diversifying your investment which from previous studies has shown it's not the best form of risk management. Sure when the market condition is favourable, you're likely to make more profit but once the market becomes unfavorable, the rate at which you'll loss increases since all altcoins are related in regards to price movement of the market.

In risk management, making use of advance trading tools are the most effective way to my understanding in minimizing losses since the system will be automated meaning you won't have be active to make trades. Money management is also another factor which shouldn't be ignored since the market is a very emotional one which can lead you to investing more than you can handle. One of the precautions a trader should always make is, never invest (trading vcapital) more than he/she can handle in case of a bad trade as this helps the trader to stay calm and not panic.

[KnightElite]

It is about your risk appetite and also about how will you handle a certain risk. We should be aware that cryptocurrencies are risky investment and risk and management is important in order to minimize the risks that we can take if we invest our money. Many traders are just keep buying and selling without proper risk and management and it is a big problem because they cannot handle it very well that can lead to major losses.

[panganib999]

Basically, risk management is more for controlling yourself like keeping emotions, with you can control emotions so you will not panic and get greedy in trading. That way you will trade even better when facing prices that suddenly decline and suddenly increase, there is no need to make choices based solely on rumors because of the possibility of the market moving in the opposite direction.

What about planning and making strategies? If you know how to execute your plans properly then you have the urge to minimize your loss because of an error. Before you make a plan, you will have a plan B so that if the first plan fails, you have the second one. Also self-discipline is essential in this cases, proper management of accounts and portfolio will help you to get an idea about the next thing to do during trades. Always observe the price movement in the market and that will be the bases on your next transactions.

[AniviaBtc]

Basically, risk management is more for controlling yourself like keeping emotions, with you can control emotions so you will not panic and get greedy in trading. That way you will trade even better when facing prices that suddenly decline and suddenly increase, there is no need to make choices based solely on rumors because of the possibility of the market moving in the opposite direction.

What about planning and making strategies? If you know how to execute your plans properly then you have the urge to minimize your loss because of an error. Before you make a plan, you will have a plan B so that if the first plan fails, you have the second one. Also self-discipline is essential in this cases, proper management of accounts and portfolio will help you to get an idea about the next thing to do during trades. Always observe the price movement in the market and that will be the bases on your next transactions.

Is it true that people really sucks at making strategies and plans in trading? What do you think is the causes of this? Greediness? Lack of knowledge? I think the number one thing that makes them to fail in trading is that they don't seek advice first to the professionals because they have many experiences to manage risks. Risk management is very crucial when it comes to cryptocurrency so every one should be aware of that. Most especially the people who really want to reach their goals, they want to take the risk by investing their money.

[Twentyonepaylots]

successful trading is about managing risk minimising it as possible  as we can , i have read that with correct risk management even with flipping a coin we can do trading and be profitable

i want to know what methods/rules  are there to minimise risks

When we do talk about minimizing risk then there would be lots on the list.

1. Never be greedy
6. Dont be emotional.
These are only the basics but actually a hard thing to be done.

 Things like this are given and actually are basic stuffs to remember when managing the risk. Just want to point out the Greediness, I mean it isn't the worst thing to contain when trading coz it can give you more than you wanted if handled properly in trading. Emotion, we've always talk about this one for the past years in trading on which everyone has to avoid including it with the present possession while trading coz it might lead to such emotion based decision.

4. Set stop loss

This is the topmost and a must priority on minimizing the risk in trading. Set your ending, always have the finish line in every situation where you will stop winning or losing neither of the two. As a matter of fact setting a stop loss is really helpful especially when you don't have much spare in trading.