Risk management

[Dr.Bitcoin_Strange]

When trading there are rules to observe in other to protect your margin,

I think you meant to say, "to protect your asset." Well, every investment has its cons and pros, and to be on the winning side of your investment, the investor must always know the rules, T&C, and risk factors of the kind of assets in which they are investing their money. Like in trading, someone who is not open-minded can't really be very successful. What I mean by being open-minded is not attaching your emotions to the trade and also not casting all your needs and problems on the trade, striving to trade all the time just to meet end-time needs. There are people who think that trading is always very profitable; at such, they are always conceiving the thought of always making profit every day; they don't for once think of the loss aspect, and anytime they encounter losses, they attach their emotions, struggling to make a profit while still encountering more losses.

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[tjtonmoy]

There are more that you have skipped to mention here. And I don't think that is a good thing to do when you are giving advice to a newbie. If you enter this realm without full or proper knowledge, you are most likely to lose to others. And margin trading is a complicated thing to start with if one is a newbie. Margin trading includes using leverage. So little movement in the market could change your trade position in a huge scale based on your leverage. So try not to get greedy and set a higher leverage thinking you will make the big bucks. Because if the market acts against you, your loss will be huge too.
Market volatility also comes in play in this section. You need to analyze the market at your best so that you don't make any wrong decision which could go against your analysis. Stop loss and take profit is an important thing here as well. We are taught to use only those assets that we can afford to lose in tradings. But it is also important to know how much you can lose in one trade and that will not affect your next trade that much. This needs to be done by proper analysis too. Don't get emotional and think that if it's falling, then it's gonna go up again. And keep the trade open. Also, do not get greedy when your trade is doing well and keep the trade open for more profits. Set a target and set a take profit limit.
Making sure you don't put all your money in one trade is also a thing to keep in mind. If one trade fails, you need to have the ability to open another one later on. Divide your portfolio and create multiple trades.
Liquidation is also a risk in margin trading that you need to know. Also forced liquidation that sometimes exchanges does on purpose. Technical issue such as server problem, system outage etc. These should also be considered as a risk and take proper actions if those things ever happen. Chances are low, but it's not impossible.
Be as detailed as possible when you are trying to teach a newbie. Because they are unaware of everything.

[ItsCrafty]

In trading, on margin or spot, risk management must really be considered because the market can change direction at any time, so we have to think about what to do if we face it. Never use too much money if you are not good at trading and don't have sufficient skills in trading because that will only make you trapped without being able to do anything and can only wait to sell.

Regarding the quote, I want to say that, Risk management is a crucial aspect of both business and trading. It involves identifying, assessing, and mitigating risks to protect the interests of an individual engaged in trading activities. The first step is to identify potential risks and their impact of occurrence on your trades .Then the next  is how you prepare yourself and  develop strategies to mitigate them. Regular review your work and with routine day to day analysis regarding the  risk indicators and market trends can help identify emerging risks and enable timely adjustments to risk management strategies. Keep in mind that risk management cannot totally remove all hazards; rather, it seeks to lessen their effects and pave the road for successful trading in the future.

[Quidat]

_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

This goes both ways. If you don't take any risks, you can't make any profits (or lose any money). If you want to make lots of money with so little investment, you should take the maximum risk possible. You just have to be on the right side of the trade but how are going to decide that? That's where it becomes a gamble if you are making your trades not based on any data.

If the trader always focuses on the risks like you said then he will end up taking no risks because he will be eliminating risks instead of adding to them. How is he gonna make any money then? He will not.

However, a trader must be willing to take risks, because if they don't dare to take risks, as you say, they will never get any profit. The higher the risk we take, the greater the profit we will get, and vice versa. In all cases such a cycle will occur, moreover this is a trade that does require risks that we must take.
But before that we also have to prepare well, I mean everyone can take risks, big or small, but with what do they take those risks, whether with the results of the analysis they did or just rely on luck. Because I often see people trading long or short for no apparent reason.

Taking risks is the main step that you should consider on doing because if you wont really be that taking risks then you wouldn't come up with these kind of actions on which it would really be that normal that you would really be making up steps for you to progress further or having the opportunity or chances on making up profits basing up on what are the things you've been dealing with.
On the time that you are really that engaging into something risky then this is where management should kick in. There are various ways on how to make yourself able to handle out such conditions
on which you would really be applying your knowledge and skills on your past experience on which you would really be neither to see to be positive or negative. There's no way on knowing about the outcome specially on an unpredictable market like this but somehow when it comes to chances then to those people who do able to risks would be always be having the chance
compared to those who haven't.

[molsewid]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

I agree to use stop loss, when I started crypto I always forgot to use stop loss because most of the coin the I invested before are new coins that's why the probability that it will be go dump or pump is uncertain. Later on I realize that it is good to have stop loss not only TP, it is very important for beginner and also to those people who doesn't have enough time monitor their assets.

[nur rochid]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

I agree to use stop loss, when I started crypto I always forgot to use stop loss because most of the coin the I invested before are new coins that's why the probability that it will be go dump or pump is uncertain. Later on I realize that it is good to have stop loss not only TP, it is very important for beginner and also to those people who doesn't have enough time monitor their assets.

trading on new coins will be more risky, if there is a disposal, then it is very extreme, that is where the role of the stop loss is to anticipate bigger losses, considering that sometimes we cannot fully observe the market, so we must be able to anticipate bad possibilities, and keep our finances safe. the size of the stop loss depends on each trader according to their view of the market, stop losses are safety, so we can calculate the risk at the beginning before trading. don't let us make the mistake of intending to trade short-term, until what happens is that we hold it for the long term

[Alisha-k]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

Risk what you can afford to lose, that way you'll never give depression or suicide (like the story I read today) a thought.
https://punchng.com/how-ogun-student-committed-suicide-after-losing-school-fees-to-sports-betting/?utm_source=telegram&utm_medium=social
This was the link shared by the OP, in there is the full information of how the young youth ended his life for greed.

[TheUltraElite]

You're absolutely right. Risk management is a key aspect of trading and investing. It involves implementing strategies and following rules to protect your capital and minimize the potential for losses. Here are some key principles of risk management in trading Determine the maximum amount of risk you are willing to take on each trade or investment. This can be defined as a percentage of your total capital or a specific dollar amount.

Managing risk is a topic for the trader who is between a newbie and a veteran. This comes with experience and most traders who fail to manage it end up with losses and eventually quit the trading scene. Therefore this should be started as the person is beginning their trading journey. The use of newly launched coins increases the risk many fold and I think this can be avoided by keeping the choices limited to bitcoin. Again humans love to take the risk and go with something that is new. So this risk assessment and management will continue.

Diversifying the portfolio leads to a large assortment of risk classes. This should be done based on how much one can handle stress.

[Alpha Marine]

This goes both ways. If you don't take any risks, you can't make any profits (or lose any money). If you want to make lots of money with so little investment, you should take the maximum risk possible. You just have to be on the right side of the trade but how are going to decide that? That's where it becomes a gamble if you are making your trades not based on any data.

If the trader always focuses on the risks like you said then he will end up taking no risks because he will be eliminating risks instead of adding to them. How is he gonna make any money then? He will not.

However, a trader must be willing to take risks, because if they don't dare to take risks, as you say, they will never get any profit. The higher the risk we take, the greater the profit we will get, and vice versa. In all cases such a cycle will occur, moreover this is a trade that does require risks that we must take.
But before that we also have to prepare well, I mean everyone can take risks, big or small, but with what do they take those risks, whether with the results of the analysis they did or just rely on luck. Because I often see people trading long or short for no apparent reason.

When they say "invest what you can afford to lose" doesn't mean don't take risk. We should always take risk but they should be calculated risk and they should be risk that won't wreck you if things go sideways. Investments on its own is a risk.
Risk is inevitable if we want to be better people in life. Investments should always be made, risk will always be taken but we should be smart about it. Don't take risk that will put you in a difficult situation later on. Taking a risk that will wreck you if it fails is also a gamble. If it works then fine, but if it doesn't you're in a whole lot shit.

[Plaguedeath]

You're just giving a common advice, everyone already know it.

You should explain about the spot trading, future trading, and margin trading, then compare to each other and how to mitigate risk of each of them.

Don't forget about how much the stop loss someone need to place, does it's -5% of the price you bought? -10%, -20% etc.

People who're not a trader already learn about only use what you can afford to lose.

[Bushdark]

In trading, on margin or spot, risk management must really be considered because the market can change direction at any time, so we have to think about what to do if we face it. Never use too much money if you are not good at trading and don't have sufficient skills in trading because that will only make you trapped without being able to do anything and can only wait to sell.

And if you can already see profit from your trading, remember to take the profit while you can. If not, you will lose those precious moments, so you have to wait even longer to be able to sell them.

We don't need to keep our profits on the trading site or from the exchange we are using because we might be tempted to trade more and because of this, we might make loses since we can be tempted to trade with big capital since we have such amount on the trading account. Many of the experience traders know this and they are always careful how they execute trades since the market can be very risky when we have not atom of risk management when we trade in the market.

The spot market is a good alternative for newbie traders that want to earn more from trading and have not perfected there skill on trading in the future market. The market needs to be volatile for us to make money since we can't earn more when the market is silence. Traders that trade on a volatile market would make more money from trader since the random movement of the market can make us earn quick and also lose quickly if we miss the trend and direction of price.

[savetheFORUM]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

I agree to use stop loss, when I started crypto I always forgot to use stop loss because most of the coin the I invested before are new coins that's why the probability that it will be go dump or pump is uncertain. Later on I realize that it is good to have stop loss not only TP, it is very important for beginner and also to those people who doesn't have enough time monitor their assets.

If someone is trading in the spot market, they might not lose anything if the price dumps of a token that they've bought, but the stop-loss will save them from getting their capital or a part of it stuck if the token dips and doesn't manage to go up again. If you have a stop-loss set already, once it's triggered, it will sell the tokens with just a small loss and your remaining investment will be released for you to be used in another trade.

That is the reason why it is important for someone to first learn the ways how trading works, especially risk management is extremely crucial because it can save you from extreme losses, if you don't know how to manage the risks, you might be exposed to greater losses than you might've ever expected.

[maydna]

~snip~

Regarding the quote, I want to say that, Risk management is a crucial aspect of both business and trading. It involves identifying, assessing, and mitigating risks to protect the interests of an individual engaged in trading activities. The first step is to identify potential risks and their impact of occurrence on your trades .Then the next  is how you prepare yourself and  develop strategies to mitigate them. Regular review your work and with routine day to day analysis regarding the  risk indicators and market trends can help identify emerging risks and enable timely adjustments to risk management strategies. Keep in mind that risk management cannot totally remove all hazards; rather, it seeks to lessen their effects and pave the road for successful trading in the future.

Even though risk management cannot eliminate all hazards, at least we can reduce risks that have a greater impact to adapt to the situations and conditions. Risk management means reducing the impact that can occur and reducing the amount of loss. And in trading, to minimize the risk of loss, we can use a stop loss which can help us not to lose too much. To practice risk management, we can start with small money until we really understand how to do it and survive in difficult times until we can make a profit again.

~snip~

We don't need to keep our profits on the trading site or from the exchange we are using because we might be tempted to trade more and because of this, we might make loses since we can be tempted to trade with big capital since we have such amount on the trading account. Many of the experience traders know this and they are always careful how they execute trades since the market can be very risky when we have not atom of risk management when we trade in the market.

The spot market is a good alternative for newbie traders that want to earn more from trading and have not perfected there skill on trading in the future market. The market needs to be volatile for us to make money since we can't earn more when the market is silence. Traders that trade on a volatile market would make more money from trader since the random movement of the market can make us earn quick and also lose quickly if we miss the trend and direction of price.

It is better for us to save the profit by withdrawing it and sending it to another wallet we have full control of so that we will not be tempted to trade in coins we have not analyzed. Experienced traders will know when they are entering and exiting the market at the right time so they can manage their risk.

I agree that the spot market is a good way for novice traders to learn to trade. And don't forget to use small money to hone your analytical skills because having a good analysis can help you to get the right coin to trade. The market will continue to fluctuate, and we won't know how to choose a coin if we don't have analytical skills.

[Faisal2202]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,

That's my rule from the last 3 years, as one of my teachers (well he was a chemistry teacher) teach us this rule that, if you are not making money then stop wasting it also comes in the same category of earning it. So from then, i always try not to waste money on useless (unnecessary things). So, yes i totally agree with you that, stopping wasting money is better than not earning.

_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

I don't think, its a good idea to focus on the risk, not the rewards, because the reward is the main purpose of your trade, and if you will not focus on the reward then how can you use Stop loss which you just mentioned below this point. Because in order to put stop loss, you must have a reward (profit) in your mind that you think you could get according to your analysis. And sometimes, stop loss comes in handy when the market takes unpredictable turns, like a recent one when Binance get sued by SEC.

[jrrsparkles]

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

A stop loss is a type of strategy, specifically a risk management strategy. However, it is crucial to be highly efficient in implementing such a strategy because our goal in trading is not merely to minimize losses, but to maximize profits. Personally, I would rather risk losing everything than remain in a prolonged trade that remains unprofitable.

I would prefer minimising the loss over the profits so it depends on every traders but the conservative strategy is minimal risk and whatever the profit is. I don't understand why we need to risk everything when we are unprofitable for a long time, I will just out it on HODL until it makes profits than decision to sell for huge loss for our capital.

[Mahanton]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

I agree to use stop loss, when I started crypto I always forgot to use stop loss because most of the coin the I invested before are new coins that's why the probability that it will be go dump or pump is uncertain. Later on I realize that it is good to have stop loss not only TP, it is very important for beginner and also to those people who doesn't have enough time monitor their assets.

If someone is trading in the spot market, they might not lose anything if the price dumps of a token that they've bought, but the stop-loss will save them from getting their capital or a part of it stuck if the token dips and doesn't manage to go up again. If you have a stop-loss set already, once it's triggered, it will sell the tokens with just a small loss and your remaining investment will be released for you to be used in another trade.

That is the reason why it is important for someone to first learn the ways how trading works, especially risk management is extremely crucial because it can save you from extreme losses, if you don't know how to manage the risks, you might be exposed to greater losses than you might've ever expected.

I could say that Stop-loss would really be just significant if you are really that making some that hedging or scalping kind of trading on which it would really be saving up your ass when the market goes to the opposite side on what you had anticipated on which it would really be limiting out the losses but if we do speak about spot trades which you would really be needing to hit up a particular TP then you wouldnt really be having that SL just because once it would be touched up then it would be a complete loss.Whereas, when you do just let it open and that position does have that negative then for sure you would be still having the chance on having break even since the losses arent realized or something that talks about paperloss. Its up to yours which method you would be using because each trader or investor does have their own approach
when it comes to things.
The most important thing to consider out is on applying that risk management most of the time on which it would really be that helpful when it comes to various situations specially talking about
dealing with this very volatile market. This isnt something that you could just simply neglect and dont mind about your management on how to deal with up.

[bitterguy28]

When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
 That's where risk management comes in handy.
    The strategies are;


_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.

_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.

_ Reacting to risk, use stop loss and always take profit.

While you have a good list of review yet? There is no assurance of earning completely meaning that we only lessen the risk of losing which meand some of those risk taker are making their decision to risk bug but to earn bigger.
It is a simple way of showing that this market is risky but worth a try.

Anyway thanks for the advices though it has been told many times before.

[shinratensei_]

with refined strategy i think someone would be more decisive in creating their decision and reacting towards the market.
the strategy that you mentioned are all good but it seems that there are many details that gone missing, like most of them are indeed some scenario that gonna be getting realized if one jumping into some trading and investing career, but also there are some preventive measurements, like making an entry while the coin only has gone down massively helps you greatly in avoiding future dumpings if the coin were to make some recovery.
such strategy is essential if you truly wanna score some good profit after all by having good entry in the first place, you are already destined to make some profit in the long run.

[wxa7115]

A stop loss is a type of strategy, specifically a risk management strategy. However, it is crucial to be highly efficient in implementing such a strategy because our goal in trading is not merely to minimize losses, but to maximize profits. Personally, I would rather risk losing everything than remain in a prolonged trade that remains unprofitable.

I would prefer minimising the loss over the profits so it depends on every traders but the conservative strategy is minimal risk and whatever the profit is. I don't understand why we need to risk everything when we are unprofitable for a long time, I will just out it on HODL until it makes profits than decision to sell for huge loss for our capital.

And this is the right approach, very often traders only think about the positive side of trading but without a doubt the most important aspect by far is the negative one, meaning we have to protect our capital at all costs, after all any profit is better than any loss.

But traders rarely think on this way, which causes them to take too many risks and lose so much money that regardless of their skill level recovering the money they have lost becomes an impossible mission.

[noormcs5]

with refined strategy i think someone would be more decisive in creating their decision and reacting towards the market.
the strategy that you mentioned are all good but it seems that there are many details that gone missing, like most of them are indeed some scenario that gonna be getting realized if one jumping into some trading and investing career, but also there are some preventive measurements, like making an entry while the coin only has gone down massively helps you greatly in avoiding future dumpings if the coin were to make some recovery.
such strategy is essential if you truly wanna score some good profit after all by having good entry in the first place, you are already destined to make some profit in the long run.

No matter how good or bad a trader you are if you are not doing the risk management then it will be very difficult for anyone to survive in this trading financial market.

No matter you are a future trader or a spot trader, a swing trader, or a day trader, in every kind of trading risk management plays a very important role. You should know how much percentage of your portfolio you should risk at one trade so that in case the trade goes in loss and not according to your trading plan, you do not lose majority of your portfolio.