Why risk management is so important ?

[michellee]

If you cannot manage the risk, you will lose your money sooner or later. So if you want to trade, you should have a plan on how much money you will use in trading so you can avoid the worst thing that can happen in the market. It's about how you manage your money in trading, so when you choose to use all of your money, your risk will be bigger.

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[drlukacs]

It's important because trade is like a gambling game. and gamble games often hit the emotions and psychology of many players. So no matter how broad your knowledge is without your capital management skills, you'll soon be out of this game. The market fluctuates unpredictably so capital management is very important. When you lose continuously, the market is not really supporting you. Take a break and wait for a good time to start again.
If you want to find the best method, maybe I would suggest reading about Dr. Elder's capital management method.

[MCobian]

According to some people risk management seems complicated, so decide not to do risk management. Including me personally
is not too comfortable when trading applies risk management, it's easier to focus on the percentage of profit. Although it is
a bit risky, but the reality until now going well. So in conclusion everyone has their own way of trading, using risk management or not.
It's just a matter of taste. Just do it according to each person's beliefs, because using risk management is not certain to succeed too.

[cassavachips]

This is simple, but many traders ignore this, because if you already know the benefits of controlling the ego and patience will be difficult. It is so difficult to recover lost capital from losses, profits will not always be greater than losses.

[bitbunnny]

It's very important that you know how to asses the risk and that you are aware what potential loss you can take. Otherwise you might find yourself in troubled situation and generate too much losses that you can't handle.
Unfortunately, not all traders are aware the risk enough or they simply ignore it thinking they will be lucky enough.
But luck doesn't have anything to do with risk and you can't make profit all the time.

[BitcoinTurk]

Managing your risk threshold and performing transactions accordingly is a very difficult thing for every investor, because the next day he needs to earn approximately 11% more of the loss the next day in order to earn the amount he loses. For example, if an investor who lost 5% today will earn 5.56% tomorrow, it will reach the amount of the main currency again. For this reason, we should set the risk threshold well and take action accordingly. On the other hand, I would like to point out that in addition, it is never proportional to 5% gain happiness and 5% loss sadness. For this reason, you should always determine yourself at least 1.5-2% more than your lost cause. Your percentage of earnings should always be higher than the percentage of loss.

[okala]

Risk management is the backbone of every successful trading plan. I have never see any trader that treats trading as gambling that succeed. Risk management allow you to treat trading as business.

[bigcash2011]

Well, i think money management and risk management are the basics for a successful and long term trader without them the trader will lose the capital sooner or later, and the key to this is using stop loss and also never trade with more than 5 percent of your capital at a time. Proper strategy with risk management will make you successful. Also if you are relatively new to trading do not try leverage trading you will lose your funds faster than you can think.

[abel1337]

Risk management is the backbone of every successful trading plan. I have never see any trader that treats trading as gambling that succeed. Risk management allow you to treat trading as business.

Right! Not by just trader but every professional should have risk management because risk management can greatly help you in different situations. You can bypass some questions in your mind on what to do next when something unexpected happened.

New traders should have risk management skills and engrave it into their minds because this is what every person need especially in trading.

[shield132]

Every medal has two sides and for every action, there is an equal and opposite reaction. Of course everything has risk and trading isn't exception but when you trade, pros have to outweigh cons. But...

It's harder to recover losses than to preserve funds.

Task isn't that simple. Sometimes for some people loss causes more reward in their brain, so as a result person tries his/her best to overcome this loses and tries to minimize mistakes. Loss can become a motivation of success.

Think of how much you can lose on a trade.

I guess that alone isn't a good advice. You need some optimism and luck during trading along other major things. So if you already think about loses, then you will never be able to risk much and those who doesn't risk, don't get reward.

Also win % does not make a successful trader, but strategy and risk management do.

In any way trading is strategy cause you have to calculate best time to sell and buy. On long term if your win % is higher, in any way you are good trader (call it luck or not).

[Mahanton]

Risk management is the backbone of every successful trading plan. I have never see any trader that treats trading as gambling that succeed. Risk management allow you to treat trading as business.

Right! Not by just trader but every professional should have risk management because risk management can greatly help you in different situations. You can bypass some questions in your mind on what to do next when something unexpected happened.

New traders should have risk management skills and engrave it into their minds because this is what every person need especially in trading.

Everything should really have that back up plan incase some scenario would be faced up or shall we called "Plan B".Risk management do really play a big important role not only on trading or into any investment things you are involved into.

This will help out on how you should set up a particular amount of risk for a specific target or goal that you are trying to achieve.If failed then you should do adjustments, it will really be a fight of
trial and error, until you do make yourself get used to it and gained up experience along the way.

[TheUltraElite]

Risk management is the backbone of every successful trading plan.

Most retail investors dont do it though. Then when the market goes bearish then start to panic unless they are already have been through bearish terms previously.

I have never see any trader that treats trading as gambling that succeed. Risk management allow you to treat trading as business.

To some extent trading needs speculation. The options and futures markets are more or less a gamble even if you are doing Technical analysis every day and night. Spot trading is not gambling though.

Risk management depends upon how you diversify the assets being put into a portfolio into different risk classes. 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.

[Ararbermas]

Patience and trust in the investment is the real key not just risky management in my opinion .  Because it would be useless to do such thing always especially in some sort of investing wherein unpredictable, such how long will last and the potential just gain even small profits. .for me much better to make a risky management in some legitimate projects to assure there's a better income after all the efforts you put in it.  Just saying.   

[stomachgrowls]

I have never see any trader that treats trading as gambling that succeed. Risk management allow you to treat trading as business.

To some extent trading needs speculation. The options and futures markets are more or less a gamble even if you are doing Technical analysis every day and night. Spot trading is not gambling though.

Risk management depends upon how you diversify the assets being put into a portfolio into different risk classes. 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.

Risk:Reward as we all know and thats the time on when risk management would really takes place where you do analyze on what are the better steps that you should take as long
it would turn out to be beneficial for you in the end of the line then that would be the thing to be select on.This would take lots of trial and errors and a specific span of time.

Patience and trust in the investment is the real key not just risky management in my opinion .  Because it would be useless to do such thing always especially in some sort of investing wherein unpredictable, such how long will last and the potential just gain even small profits. .for me much better to make a risky management in some legitimate projects to assure there's a better income after all the efforts you put in it.  Just saying.   

Patience and trust are really needed but you should be wise too on when you should cut of this thing for you to avoid further loss since not all that youve

patiently waited would really result into positive.Therefore, its still a gamble if you do wait up for too long into something which isnt really that worth.
So this do still involved risk management in the end of the day.

[carter34]

It is so difficult to recover lost capital from losses, profits will not always be greater than losses.

Really so you mean this? Why do people keep on trading then if profit will not always be greater than losses. Hey... People are making more profit than losses, you have to learn better ways to make better profit.

[Yatsan]

It is so difficult to recover lost capital from losses, profits will not always be greater than losses.

Really so you mean this? Why do people keep on trading then if profit will not always be greater than losses. Hey... People are making more profit than losses, you have to learn better ways to make better profit.

Man believe me, there's a lot of losing traders than, profiting ones. Trading is really since when you lose, it's really hard to recover, expect if you trade more funds and recover from it. OP's post is actually somewhat true (well, at least for day trading). Losing day trader's are really many compared to those who are winning but taking their trade as long term.

you have to learn better ways to make better profit.

There's no better way than to study trading  If you really want to be a profiting trader, you should manage your risk and apply all knowledge needed. 

[Subbir]

Risk management applies to each job Investing without risk isn't possible this is often why investing during a site requires trust and work to avoid risks Crypto market investing is typically not later in gambling. there's a fear of losing more in gambling If we invest in cryptocurrencies then long-term investments are less risky If the worth goes up it's possible to form tons of profit Therefore, to avoid risk you've got to make a decision about where to take a position and wait until the worth rises.

[wozzek23]

It's very important that you know how to asses the risk and that you are aware what potential loss you can take. Otherwise you might find yourself in troubled situation and generate too much losses that you can't handle.

Yes, risk management is all about pre-calculating about how much losses a trader may able to afford on unexpected events. Experts usually coin this as "calculated risk". When the traders who are not bothering about how much losses they may face with respect to available capital and how long it may take to recover the losses if happens, then they may not able to sustain in trading over the long run.

Unfortunately, not all traders are aware the risk enough or they simply ignore it thinking they will be lucky enough.
But luck doesn't have anything to do with risk and you can't make profit all the time.

If you notice, people are mostly luckier to escape but they may get trapped one day or other. Unfortunately people are learning about risk management only after facing some disaster. It means they start thinking about risk management and start giving importance to it only after gaining considerable experience.

[darewaller]

Having less loss and having quick profits is basically the method to do it. I had a friend who basically had a system where he had a big bankroll to himself and all he did was keep buying whenever price went down 5% and as soon as he made 5% profit he sold.

So in his mind, if he buys at 100 dollars, he buys more at 95, and more at 90 and more at 85 basically no matter how much it falls, and he sold as soon as whatever the purchase average was 5%+ of that price. That is really not the most perfect method but that was the best risk management I have ever seen. I do not really think there are any better methods than this, it helped that dude to be in profit almost all the time, and never seen him lose too much money neither, sure lost a bit but never too much.

[Ridwan Fauzi]

It is so difficult to recover lost capital from losses, profits will not always be greater than losses.

Really so you mean this? Why do people keep on trading then if profit will not always be greater than losses. Hey... People are making more profit than losses, you have to learn better ways to make better profit.

That's true, if trader only get loses than trading there will not be a trader and there will much exchanges that popping up.

Trading is depend on your knowledge and on your analysis, you will get profit when you know both of them and you will get lose every time you trade if you don't have both of them.

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.