Why risk management is so important ?

[farukahmed]

We knoe that risk management is the process of identifying possible risks, problems or disasters before they happen. This allows business owners to set up procedures to avoid the risk, minimize its impact at the very least help cope with its impact. The crypto market risk management is important at the company level because most companies are exposed to many financial factors and conditions, such as interest rates on short, medium and long-term credit instruments and interest rates and duration of trade payable and receivable for any mission.

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[davinchi]

A high risk portfolio has the chance of making a higher return. So it dynamic thing to keep weighing out assets based on cost benefit ratios thus not everyone's cup of tea, better done by fund managers.

But I believe, anyone can learn those tricks by experience rather than simply studying on books or on materials. I agree the criteria we do set on risk management is not always the same thing but we can simply it by approaching in percentage ratio, for example. I mean all big things are having some short-cuts to make it easier to understand or applicable up to our needed level .

Remember, when you have intention to gain money through trading or wherever its place something that you should know first is understanding/knowledge. You will be fooled if you don't have a knowledge but you have a high expectation.

Yes, this is all that we do call as risk management. Your expectation should be ONLY on profits but on losses as well. When you have plans about how to manage/afford the losses then you can easily manage and cope up the frustrating losing moments which will help you start focusing one making profits on next opportunity. Yes, risk management will help you to pre-evaluate your potential losses and will help you to plan accordingly.

[adzino]

Risk management is actually quite important when it involves investment (gambling, trading and anything related to financial transaction). Most people over here mainly loses everything because of poor risk management. Risk/Reward ratio is one of the way to evaluate if the risk is worth taking based on the reward, but this is just a part of the the risk management (evaluation). You could probably add other necessary steps required in risk management.

[lienfaye]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

[minairia3]

I like the idea OP but whats wrong are the application of traders. Some cant help themselve to stop trailing profits resulting to more loses. As a trader risk and discipline are both should work on your part. If you gain enough target already reserved other funds for another schedule cause doing more trades than your normal routine could lead somewhere you dont anticipate happening.

I also trying out to document my trades to help me determine my PNL for all the activities I did. I think this is also a good suggestion for others to know if your experience on trading is improving a lot or not.

[bitgolden]

Most people over here mainly loses everything because of poor risk management. Risk/Reward ratio is one of the way to evaluate if the risk is worth taking based on the reward, but this is just a part of the the risk management (evaluation). You could probably add other necessary steps required in risk management.

I guess pre-evaluation alone more than enough to avoid losses. Because when a trade is not good as per your own criteria for risk/reward ration then you may skip it. But usually traders not doing that but they do deliberately trade each and every call without pre-accessing the risk/reward things. When you are selective as per your pre-determined things then you can trade what suits the most as you will not be wasting your time with noises.

I guess only traders who bother about preventing losses may able to follow these kinds of management principles more consciously. But I am a trader who forgets all my own discipline rules and may think about my own set of rules only when my trade turns negative.

Before continuing your trading, you must focus on developing self-discipline and emotion control so that you can get back into the tracks of becoming professional trader because even after lots of trade if you are not working on fixing your spotted weakness then there will be no possibility of achieving the level of pro trader.

This meme could explain the scenario more better:

[alan2here]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

In any investment, there must be a backup plan because the crypto market is often very easy to manipulate, and if not careful you will face a lot of big risks.

In the past, I made many mistakes and lost a lot of money when choosing to invest, but now everything is better because I always learn from those failures. One way or another, you should not be greedy and always manage your assets in the best way.

[Dr.Osh]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

without that, I doubt they would trade without seeing the risk. honestly this is one of the factors that make many traders stop. however, risk management is very necessary. consideration of the risks that can be surmounted will make us better prepared, and confident with the decisions we can take.

[cryptothreads]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

without that, I doubt they would trade without seeing the risk. honestly this is one of the factors that make many traders stop. however, risk management is very necessary. consideration of the risks that can be surmounted will make us better prepared, and confident with the decisions we can take.

Each decision needs to be knowledgeable because if you do not have the experience, each of your choices will greatly affect the current assets.

I usually divide the appropriate capital for each of my investments and never spend all my money on buying a coin because the risk is very high. Sometimes I still lose money because of the market volatility. However, after all, I still make a profit again because I always have a second plan when the market suddenly collapses.

[onrise]

Risk is everything in this world and in crypto talking about risk it is at a very high level. If the risk-reward ratio is not favourable, then trading or investing will make no sense as it will only end up losing the money and that too quickly as crypto is highly volatile. We need to measure our steps and ensure that we can mitigate risk as much as possible and take the corrective step in order to gain.

[Taskford]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

without that, I doubt they would trade without seeing the risk. honestly this is one of the factors that make many traders stop. however, risk management is very necessary. consideration of the risks that can be surmounted will make us better prepared, and confident with the decisions we can take.

Each decision needs to be knowledgeable because if you do not have the experience, each of your choices will greatly affect the current assets.

I usually divide the appropriate capital for each of my investments and never spend all my money on buying a coin because the risk is very high. Sometimes I still lose money because of the market volatility. However, after all, I still make a profit again because I always have a second plan when the market suddenly collapses.

It will be bad decision for anyone if they put all there money in the single assets especially if we talk about cryptocurrency since there are series of events where alts get dump by their own devs so if the the person put all his money in this kind of things then he will lose everything, but if they put on several altcoins exist they will have a high chance to recover back if they lose the other holdings.

[Romeotom]

Risk without nothing in this crypto world so it's doesn't matter to me because it's simply combination when i makes small profits. Afterall i hope one day i want take chance a smart trader then risk will less to me. Especially trading means not profits everyday so i will be happy for trading with loss/gain anyone.

[azmirihaque]

There is a saying, "No risk, no gain". That means, where there has a gain, there has a risk of loss. So, risk management is very much important for any trade. But risk management is not so easy. A vast of knowledge is required for analyzing the different variables. Vary few traders engage in trade without knowing such risk management. To be a successful trader, beside risk management, a person should have the ability to analyze different trends of market, gather experience and study the past and present behaviour of market etc

[Mahanton]

Indeed risk management is important for every traders because thats how you can control yourself for further losses. Having a plan, strategy and patience are required in order to do it right because if you have no plan and unable to manage the risk of trading you might lose your capital or worse lose the chance to recover it. Its not easy to be a trader and to earn as well however we can maximize our chance to gain by following our plan and ot greedy to earn quick.

without that, I doubt they would trade without seeing the risk. honestly this is one of the factors that make many traders stop. however, risk management is very necessary. consideration of the risks that can be surmounted will make us better prepared, and confident with the decisions we can take.

Each decision needs to be knowledgeable because if you do not have the experience, each of your choices will greatly affect the current assets.

I usually divide the appropriate capital for each of my investments and never spend all my money on buying a coin because the risk is very high. Sometimes I still lose money because of the market volatility. However, after all, I still make a profit again because I always have a second plan when the market suddenly collapses.

It will be bad decision for anyone if they put all there money in the single assets especially if we talk about cryptocurrency since there are series of events where alts get dump by their own devs so if the the person put all his money in this kind of things then he will lose everything, but if they put on several altcoins exist they will have a high chance to recover back if they lose the other holdings.

Would depend on the financial capacity of a certain individual because not all would really have that kind of capability on doing multiple investments
since they do only have sufficient funds for only a few or even a single project that they do tend to invest on.So its really hard to make conclusions that
people do only have single investment doesn't consider out to have lots.Of course those things are in minds but they don't have any choice since they
don't already have money to spent.

[AniviaBtc]

Risk management is what we should focus especially if we want to be consistently earning in the market. Risk management consists of different areas that we should master: first is planning, second is identifying the risk and reward ratio, third is position sizing which is the very important in order to manage the risks very well. Traders are usually focusing on the money that they may earn and not the money that they may lose and that is why when they all in their money in just one trade, they suffer huge losses that takes time in order for them to recover it.

Everyone who engage in cryptocurrency experiences risks and it never go away. We need to accept the fact that risks are always there if there's a money involved, especially in trading, no one is safe when we say there is a risk. It takes courage for you to become confident on what you are manipulating, risk management is the key for us to minimize the probability of losing money and the amount that we are losing.

It is essential for us to become prepared whenever we trade, it is important that we have strategies, we are ready, and we know what to do before we do some transactions. We all want to grow our money that's why as much as possible, always apply risk management in your trading so that you can win in the market consistently.

You should know how to plan, make strategies, become flexible and practice good decision making in order to become a better and effective trader. Don't be scared to fail because if there is failure, there is a lesson that you can obtain.

[leyton11]

That's right, not only capital management, but also trading strategy. Two people open the same order with the same capital ratio but the result will be completely different from each other. because each person has their own trading strategy and has its own RR ratio. It's best to use the best 1: 3 RR ratio, which is that when you lose, you lose only 1, but when you win, you will have 3. That's quite a great strategy that I'm using, It applies quite well to the forex.

[Wafilian]

Risk management is very important. An investor cannot become successful unless he or she uses risk management properly. From my own experience, I have not seen the face of profit until I have followed risk management, but since I have been following it, Since then I have been able to calculate the profit and loss of monthly trading and bring out the monthly profit.

[Utoy101]

I agree with you...

Aside the fact that every trader should trade with what he/she can afford to lose,  proper risk management is very paramount to having a profitable trading. Reducing  mistakes to the bearest minimum should be the utmost priority of every trader as a single lose can cause a huge loss that might results in portfolio burn. Every trader ought to get acquainted with various risk management strategies and to be help them avoid minor or unnecessary risk mistakes

[Jonyshake71]

Of course risk management is the first thing that makes a trader perfect. Without having it, a trader can loss all his fund in treading. So Its impossible being a perfect trader without having this skill. But without risk, it's not possible to become successful in life

[Vitalicus]

Risk management is very important. An investor cannot become successful unless he or she uses risk management properly. From my own experience, I have not seen the face of profit until I have followed risk management, but since I have been following it, Since then I have been able to calculate the profit and loss of monthly trading and bring out the monthly profit.

It's right. Risk management is critical for trading. Besides the knowledge about the market, you also have to learn how to manage the risk. Sometime you'll need to accept the risk if the chance of creating profit is large enough. The more profits, the more risks that you have to face. In a new-born market such as cryptocurrency market, there are a lot of risks. Therefore, without doing risk management, traders have a great risk of losing their money for nothing.