Why risk management is so important for Every Trader.

[bitgolden]

We can potentially lose our money if we don't know what we trade and why we're trading. The risk will be with any of the chosen field we do, trading or investing/hodling.

Whether you've got a huge capital as you trade or invest, it can potentially go to zero if you're reckless and just trades with your emotion.

Yeah, because nothing comes with zero risks. We are always talking about bitcoin is risk-less in long run holding still it is coming up with at least 0.001% of risk as anything may happen in future which may not be predictable with a human brain. So, not risking with all our money may help in the end which must be treated as the highest prioritized principle in risk management of crypto trading.

Risk management got its impact in finalizing our outcome of trading in direct proportional way so giving it importance by following it while trading will lead to sustaining good results in crypto trading.

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[jossiel]

We can potentially lose our money if we don't know what we trade and why we're trading. The risk will be with any of the chosen field we do, trading or investing/hodling.

Whether you've got a huge capital as you trade or invest, it can potentially go to zero if you're reckless and just trades with your emotion.

Yeah, because nothing comes with zero risks. We are always talking about bitcoin is risk-less in long run holding still it is coming up with at least 0.001% of risk as anything may happen in future which may not be predictable with a human brain. So, not risking with all our money may help in the end which must be treated as the highest prioritized principle in risk management of crypto trading.

Risk management got its impact in finalizing our outcome of trading in direct proportional way so giving it importance by following it while trading will lead to sustaining good results in crypto trading.

People don't understand that fact about bitcoin. They see the current drop of it but they never look at the long term power that it's going to have.

Well even in today, bitcoin is already showing what it can manage and maintain its pricing from the moment that it had dropped from the ATH.

[Helpme_please]

every business have their own risk, even if we trade in real life we will see risk that may suffer us later. And its happen in finance market which is have bigger risk in my opinion. There are huge risk with huge gain and every investors that will join in this market must understand about it. Our money could be zero if we didnt use risk management in finance market, price could goes down anytime and all price almost be zero. Stop loss or other MM will help us secure our money when it happen.

The risk remains.

We can potentially lose our money if we don't know what we trade and why we're trading. The risk will be with any of the chosen field we do, trading or investing/hodling.

Whether you've got a huge capital as you trade or invest, it can potentially go to zero if you're reckless and just trades with your emotion.

big capital didnt guarantee to us we will could survive longer than trader with small fund. Usually they were too confidence with balance they have and careless when every open transaction. Let transaction opened without any clear money management either stop loss or another ways to secure their money.  Money management will always help us in extreme market condition that suddenly happen.

[Oilacris]

every business have their own risk, even if we trade in real life we will see risk that may suffer us later. And its happen in finance market which is have bigger risk in my opinion. There are huge risk with huge gain and every investors that will join in this market must understand about it. Our money could be zero if we didnt use risk management in finance market, price could goes down anytime and all price almost be zero. Stop loss or other MM will help us secure our money when it happen.

The risk remains.

We can potentially lose our money if we don't know what we trade and why we're trading. The risk will be with any of the chosen field we do, trading or investing/hodling.

Whether you've got a huge capital as you trade or invest, it can potentially go to zero if you're reckless and just trades with your emotion.

big capital didnt guarantee to us we will could survive longer than trader with small fund. Usually they were too confidence with balance they have and careless when every open transaction. Let transaction opened without any clear money management either stop loss or another ways to secure their money.  Money management will always help us in extreme market condition that suddenly happen.

A very wrong mindset to have because big capital wont really make out guaranteed of success because what matter most is to sustain yourself or survive in the market.

You would really be needing risk management and making it as a default thing as this is the main factor on where you do really need and the most important.

As a trader then earning profits or money on this market is hard but could really be possible if you do know on what you are doing.

[Hypnosis00]

A very wrong mindset to have because big capital wont really make out guaranteed of success because what matter most is to sustain yourself or survive in the market.

You would really be needing risk management and making it as a default thing as this is the main factor on where you do really need and the most important.

As a trader then earning profits or money on this market is hard but could really be possible if you do know on what you are doing.

The result is totally depending on what we do but for me, capital matter a lot and the chances to make a big profit is high if you have a huge amount of capital in trading. Because you can't just invest in 1 coin, by spreading your money to different coins it helps to recover losses if it happens, or it all be in gaining side, well, that even more advantage.

However, if we think about losing, you also have a chance to loses more compared to small traders. But the outlook will certainly change depending on how we manage our trade.

[Serco]

We can potentially lose our money if we don't know what we trade and why we're trading. The risk will be with any of the chosen field we do, trading or investing/hodling.

Whether you've got a huge capital as you trade or invest, it can potentially go to zero if you're reckless and just trades with your emotion.

Yeah, because nothing comes with zero risks. We are always talking about bitcoin is risk-less in long run holding still it is coming up with at least 0.001% of risk as anything may happen in future which may not be predictable with a human brain. So, not risking with all our money may help in the end which must be treated as the highest prioritized principle in risk management of crypto trading.

Risk management got its impact in finalizing our outcome of trading in direct proportional way so giving it importance by following it while trading will lead to sustaining good results in crypto trading.

People don't understand that fact about bitcoin. They see the current drop of it but they never look at the long term power that it's going to have.

Well even in today, bitcoin is already showing what it can manage and maintain its pricing from the moment that it had dropped from the ATH.

most of them didn't have knowledge about bitcoin price cycle, when they invest into cryptocurrency market mostly due FOMO from internet of maybe their friend which is got huge earning from this market. Having complete knowledge in technical analisys and  cryptocurrency cycle could help us generate high profit. we will know how to make money faster than in other field.

[kawetsriyanto]

most of them didn't have knowledge about bitcoin price cycle, when they invest into cryptocurrency market mostly due FOMO

They probably know it but they don't understand enough about the proper time to "entry and exit". Yep, many people joined crypto investment because of FOMO and don't have sufficient knowledge. Technical analysis or analyze the chart isn't enough, we also need to do fundamental analysis and monitor the current update in the crypto space. Crypto market is really unstable and easy to change because of the news or issues. So, not only learning price cycle and technical analysis, don't forget to learn fundamental analysis and always monitor the update about crypto news/issues.

[wahyu wida]

most of them didn't have knowledge about bitcoin price cycle, when they invest into cryptocurrency market mostly due FOMO

They probably know it but they don't understand enough about the proper time to "entry and exit". Yep, many people joined crypto investment because of FOMO and don't have sufficient knowledge. Technical analysis or analyze the chart isn't enough, we also need to do fundamental analysis and monitor the current update in the crypto space. Crypto market is really unstable and easy to change because of the news or issues. So, not only learning price cycle and technical analysis, don't forget to learn fundamental analysis and always monitor the update about crypto news/issues.

we can see during the fomo that many people actually dare to buy when the price is high, but if bitcoin is in a bearish trend at a discount, not many buy it. from here we can conclude that traders' psychology is being played with so that they are hypnotized by the words of whales

[Hulhala15]

I totally agree with the author of this post.
Risk management is essential for every trader who looks forward to making a stable and more or less predictable profits from trading.
I would also mention money-management which goes hand to hand with risk management. It is undoubtedly true that you should somehow hedge your risks but you should also know how to manage your budget in the most efficient way. Like it is totally wrong to put all of the money from the deposit into a single trade because in the worst-case scenario (which happens surprisingly frequently) you'll lose all the money at once.
Money management also implies having a strict trading strategy which can give some adequate and objective explanation, why you should do this or that deal. It is crucial if you want to keep your emotions under control. In this case, you won't have any fear or greed, you'll have a plan with the calculated probabilities and the plan B which will help you to lose as little money as it is possible.
Money and risk management are interconnected but I think that these are the only things which enable to differentiate between a trader/investor and a gambler.

[AakZaki]

Risk management and setting a stop loss will provide good management when a trade does not match the analysis and is forced to cut it. it will reduce the loss even more.
however, money management is the most important thing so that money management for trading can be managed properly when the market crashes. Don't use all the money to enter in the trade because it will not be good. In addition, psychological management must be considered. Don't panic too much when the price starts to crash, it's time to buy, use the spare money that has been prepared.
every trader must have good risk management and psychological management.

[darewaller]

money management is the most important thing so that money management for trading can be managed properly when the market crashes.

In my understanding both risk management and money management are about how a trader needs to react against market fluctuations in a way on minimizing losses and helping to maximize the opportunities for profit making. No big differences.

You would really be needing risk management and making it as a default thing as this is the main factor on where you do really need and the most important.

Yeah, setting risk management as a default thing must be a right approach. But most people never pre-calculate anything before opening a trade; if they are aware of risk management then probably foresee everything and will risk in their every trade in a way they could sustain among many losses so that they could finish a week or month in overall profits.

[conected]

Risk management and setting a stop loss will provide good management when a trade does not match the analysis and is forced to cut it. it will reduce the loss even more.
however, money management is the most important thing so that money management for trading can be managed properly when the market crashes. Don't use all the money to enter in the trade because it will not be good. In addition, psychological management must be considered. Don't panic too much when the price starts to crash, it's time to buy, use the spare money that has been prepared.
every trader must have good risk management and psychological management.

- The backwardness in the trading experience combined with the overall view is also lacking, that makes their management ability not comprehensive and accurate, another serious problem is that they are not able to find reasonable stops as they are trying to use more than one trading instrument during the determination process. A few simple indicators will give accurate stops, there is no need to combine too many options at once, it can be optimal but imperfect application will be a negative reaction.

[Oilacris]

A very wrong mindset to have because big capital wont really make out guaranteed of success because what matter most is to sustain yourself or survive in the market.

You would really be needing risk management and making it as a default thing as this is the main factor on where you do really need and the most important.

As a trader then earning profits or money on this market is hard but could really be possible if you do know on what you are doing.

The result is totally depending on what we do but for me, capital matter a lot and the chances to make a big profit is high if you have a huge amount of capital in trading. Because you can't just invest in 1 coin, by spreading your money to different coins it helps to recover losses if it happens, or it all be in gaining side, well, that even more advantage.

However, if we think about losing, you also have a chance to loses more compared to small traders. But the outlook will certainly change depending on how we manage our trade.

This is true and accurate on where big capital does have even more versatility when it comes to your trading decisions where you can neither decide on diversifying or making a bigger lot size on your orders

which could really take some advantage but of course you should mind that the risk is more higher than you do have less capital but we wont really be gaining that much or potential earnings if we wont risk.

So its a matter of choice of someone on how they would gonna handle their finances and investment. All possible factors that can affect your trades should be considered to look upon and not

just simply neglecting or not giving out some importance or focus.

[kawetsriyanto]

from here we can conclude that traders' psychology is being played with so that they are hypnotized by the words of whales

They can be hypnotized because they have lack knowledge and self-control. If they have sufficient knowledge, I am sure they won't be hypnotized since they know it is too risky. Also, self-control has an important role, many people followed FOMO because they are too greedy and cannot control themselves. So, there are two things that we must have to avoid following FOMO blindly, they are (1)knowledge and (2)self-control. Make sure you have them well, mate. 

[AakZaki]

money management is the most important thing so that money management for trading can be managed properly when the market crashes.

In my understanding both risk management and money management are about how a trader needs to react against market fluctuations in a way on minimizing losses and helping to maximize the opportunities for profit making. No big differences.

indeed there is no big difference, but both must be done correctly and disciplined according to the strategy that has been made. In addition to the risk management mentioned in this thread. Some other things such as the correct use of technical and fundamental analysis will be very influential. Trading is not just buying and selling, but how to multiply assets by minimizing the risks that will occur. Profits are not always obtained, but losses can be avoided.

[Obito]

Well cryptocurrency is risky, and trading is one of the risky things that you may do in the crypto world, there are a lot of things you can do in cryptocurrency and for me, trading is the riskiest because it requires good knowledge and well observation in the market. If you dont have risk management while trading then for sure all of your money will be a loss.

Your talking like cryptocurrency investing alone isn't risky enough, remember that most cryptocurrency are so volatile that investing in them is pretty much a risk of itself, if you can manage your risk when trading I think that you will do fine, remember what the OP said, go for the long-term if you can so you can get a big profit.

[Hobo66]

Risk management makes a difference cut down misfortunes. It can too offer assistance to ensure traders' accounts from losing all of its cash. The chance happens when dealers endure misfortunes. If the chance can be overseen, dealers can open themselves up to making cash within the market.

[imstillthebest]

If you enter a $100 trade and lose 15%, you’re down to $85.

If you make 15% profit on your next trade, now you have $97.75

where did the $2.25 dollars go ? in the fees ?

It's harder to recover losses than to preserve funds. Don't think how much you can make on a trade. Think of how much you can lose on a trade. Risk-Reward ratio is key.

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

we dont wait before the price fluctuate but if we want to preserve our funds we can withdraw or trade it into stable coins and losses are hard to recover if you trade on the wrong coin .
traders wont get high win percent if they arent good but not all times they are in profit but they can experience a bad trade too sometimes .

[redsun114]

If you enter a $100 trade and lose 15%, you’re down to $85.

If you make 15% profit on your next trade, now you have $97.75

where did the $2.25 dollars go ? in the fees ?

No, that's just how math works. If you enter with 100 dollars and lose 50% then you will have 50 dollars, if you earn 50% more that will be 75 dollars. It means if you enter with 100 bucks and lose 50% of that, you need 100% profit to make that money back, 50 dollars' 100% is another 50 dollars, whereas 100 dollars' 50% is 50 dollars loss. That's how it is in every calculation, whatever you lose, you need to make it twice back in the percentage sense.

It is still same money though, so if you enter with 100 dollars and lose 50 bucks, you need 50 bucks to recover it back, hence it is same thing in dollar worth, it is just different when you calculate it in % and that's it. Do it with any starting amount, 20 dollars, 10000 dollars whatever you want to test it, it is always the same, if you lose 50% you need 100% back, if you lose 20%, you need 40% back.

[nowlscor18]

Risk management makes a difference cut down misfortunes. It can too offer assistance to ensure traders' accounts from losing all of its cash. The chance happens when dealers endure misfortunes. If the chance can be overseen, dealers can open themselves up to making cash within the market.

Yes I agree, Risk management helps cut down losses. It can also help protect traders' accounts from losing all of its money. The risk occurs when traders suffer losses. If the risk can be managed, traders can open themselves up to making money in the market. You must be able to manage your risk and cut losses so you can continue to trade. Managing risk also means protecting your capital. It's important to not let a bad trade drain your account.