Risk management

[Inwestour]

Traders often find themselves in a difficult position, on one hand they want to limit their exposure to the markets and reduce the potential losses they can suffer, on the other hand they need to increase their position size so they can maximize their profits.

So there is a sweet spot they need to hit in which the amount of money they use on each trade is neither too big or too small, and this is a balance that is difficult to hit, but with enough experience and skill you will be able to hit such spot more often and get the best of both worlds.

The more capital you have, the more opportunities you have. It is difficult for novice traders at first, but this is how they get used to money, if a trader is successful, he will increase his funds, perhaps at first he will trade the equivalent of hundreds of dollars, then thousands, and so on.

If the strategy works for small amounts, then most likely it will work for big money. And there will already be an important point, as far as the trader is ready for big money, not everyone can equally handle good with big money, as small ones.

[mvdheuvel1983]

If you don't manage your risk management properly, you will never be successful because risk management is the most important aspect of trading. But my personal experience is a little different in that you have to learn how to manage all your money very well. There are many people who want to do good things but there are so many wrong decisions in money and life management that they can't get good results despite their efforts.

As traders, there is an amount of money we are comfortable losing and there are some we just can afford to lose. The most important things I learned from risk management are risk tolerance which refer to the amount of money you are willing to risk on one specific trade. Then, I also learned which is followed from the first is how to effectively and correctly initiate stop loss orders to prevent losses. Lastly, learning how to calculate my position size very quickly. Any newbie who can get a grasps on these strategies and be able to implement it, they are sure to have a good trading journey.

[Mahanton]

Traders often find themselves in a difficult position, on one hand they want to limit their exposure to the markets and reduce the potential losses they can suffer, on the other hand they need to increase their position size so they can maximize their profits.

So there is a sweet spot they need to hit in which the amount of money they use on each trade is neither too big or too small, and this is a balance that is difficult to hit, but with enough experience and skill you will be able to hit such spot more often and get the best of both worlds.

The more capital you have, the more opportunities you have. It is difficult for novice traders at first, but this is how they get used to money, if a trader is successful, he will increase his funds, perhaps at first he will trade the equivalent of hundreds of dollars, then thousands, and so on.

If the strategy works for small amounts, then most likely it will work for big money. And there will already be an important point, as far as the trader is ready for big money, not everyone can equally handle good with big money, as small ones.

Whatever things you've been dealing with and in speaking about having a risks then it would really be just that normal that you would really be having that risks management. You cant really just make out some careless decisions or making out some actions without any basis because this is really that pure gambling. You should  really know on how to manage up your funds so that you would really be able to utilize it as efficient as it should be. You cant really be that too careless on making decisions specially if this one is attached on investment on which money is really in talks. On the time that you wouldn't really be that too mindful about
this particular step then you would really be finding yourself in huge losses instead of gains and this is something that we should really be avoiding. As much as you could then always follow up those
basic principles on how investment should really be handled out.

[savetheFORUM]

It should be understood that risk management is a very difficult task. From my own experience I can say that it is difficult to pick up and learn. This usually takes quite a bit of time and effort.

No matter how much time and effort it takes or how difficult it is, one must learn risk management to be a successful trader because there can be good trades and there can be bad trades, when a trade goes well, that is all well, but when a trade goes bad, that is where risk management techniques come handy and can save you from suffering from extreme losses.

Someone who doesn't apply risk management methods to their trades is more likely to lose money than someone who does it, having stop-loss for every trade can always save you from getting liquidated or having your capital stuck in one trade.

[safar1980]

If you want to reduce risks, then you need to not participate in risky trading transactions on the crypto exchange and understand the consequences of risky transactions.
But in less risky trades, there is little profit and a lot of time spent on trading. Classic traders do not use more than 3% of capital for risky trading, and those who use more than 5% for this are already trading incorrectly.

[Zilon]

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

The use of stop loss may not be profitable to scalpers. Especially when the join a trade that is about to retrace unknown to them and it triggers their stoploss before moving in the main direction. Stop loss is best practice for day traders or position traders for scalpers they just have to monitor their trades and be disciplined enough to know the exact amount they are willing to lose from a trade and them take their profit and loss decision based on that.

[Quidat]

It should be understood that risk management is a very difficult task. From my own experience I can say that it is difficult to pick up and learn. This usually takes quite a bit of time and effort.

No matter how much time and effort it takes or how difficult it is, one must learn risk management to be a successful trader because there can be good trades and there can be bad trades, when a trade goes well, that is all well, but when a trade goes bad, that is where risk management techniques come handy and can save you from suffering from extreme losses.

Someone who doesn't apply risk management methods to their trades is more likely to lose money than someone who does it, having stop-loss for every trade can always save you from getting liquidated or having your capital stuck in one trade.

You would really be learning that risk management along the way if you have none with your current standing or investing behavior on which those losses and errors would really make you realize that you must really be setting out that limit line which is something that you would really be needing on this kind of career. You cant really be having that gambler like kind of behavior on where you do go all in with your buying or selling positions on which it would really be just resulting into devastation. Risk management is really that  very crucial not only on trading but also in other investments and businesses as well on which you are really that engaging into it. You should really be sensible on doing such stuff because if you dont then losses would really be keeping on piling up.

[Crypto5060]

Trading can be rewarding if you master how to manage your risk, knowing the percentage of your money you are willing to lose at a time and maintaining it consistently.

[pawanjain]

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.

The third point you mentioned is the most critical one and this is where most of make the mistake.
We forget to take the profits and keep waiting for more profits in greed.
We don't realize that the profits are diminishing and end up selling in a loss.
We don't use stoploss because we want to give room to the trade and end up losing more than our risk.

The solution is to make stop loss and take profit a habit and use them in all the trades.

[Hamza2424]

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.

One of my favorite topics is trading. I would like to start my point of view with a golden principle in trading you can relate to risk management "Not losing is also profit taking". So Risk management is under your strategy skills, in a few words you can say ABC "Always Be Careful" you have to manage your trade for the risk management on a basic level, if we start moving from there to some advanced level first thing is Stop loss, then Take profit. In my view, if a person holds a strong grip on these terms he is one good trader because it covers a lot of terms in trading as risk management, emotion control, Confident (I think this I partial emotion) etc etc.

Op your title is itself a Book and your content from that point is too miniature, 1 = Funds Control (Management), 2 = Risk Identification 3=  Actions As you've mentioned these terms can be considered as one of the base classes in Riskmanagemnt Iw ould like to add more phases in between there.


⚫  Risk Assessment (After Identification)
⚫  Risk Mitigation (Before Action).
⚫  Risk Tolerance (Before Action & After Mitigraition)
⚫  Risk Review  (After Mitigation and Monitoring).
⚫  Risk Avoidance (Advanced Analysis).

You can that this is your Intelligence support. Hope so I have added something new to your database  

-Hamza

[bangjoe]

Risk management in investing is very important because it involves identifying, analyzing and managing the risks associated with investment decisions. The main objective of risk management is to protect capital, minimize losses, and increase the chances of long-term investment success.

In the investment context, risk refers to the possibility of loss or an unwanted change in the value of an investment. Every investment has inherent risks related to factors such as market fluctuations, economic changes, government regulations or unforeseen events. By understanding and managing these risks, investors can reduce their negative impact and increase the chances of investment success.

And indeed risk management is useful for detecting probability of predictions of fluctuations and security of financial flow, so that it has a fairly mature consideration and honestly risk management is a form of anticipatory attitude in the situation where we understand how much loss will be obtained if it is not in accordance with the calculation. And that is very important in the mentality of trade, so we have a limit to something that we cannot lose.

I think it is more to the learning step about news sentiments before deciding risk taking, it also needs to be considered and calculate the possibility of making investment decisions, the factors that affect market prices besides technical calculations need to be read and pay attention to decide the risk taker at trading that we will do.

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.

There are pros and cons to stop loss in scripto trading. For example, when you trade a coin at a certain price, you can place a stop loss at a certain price to avoid the risk of losing your entire money. When it falls too much and when the market reaches your fixed price, your trade will automatically be canceled. The problem here is that the money you lose is not recoverable, but if you don't use stop loss, even if the coin's price drops too much. There is a possibility of profit again.

I think it depends on what coins you buy, if the coin you buy has a probability to turn the situation in the next time, the stop loss decision you don't need to take at the time of decline, but if you find a coin that has no power, maintaining it is also an action Stupid and you can lose all the money, which you actually stop it before.

[borovichok]

If you want to reduce risks, then you need to not participate in risky trading transactions on the crypto exchange and understand the consequences of risky transactions.
But in less risky trades, there is little profit and a lot of time spent on trading. Classic traders do not use more than 3% of capital for risky trading, and those who use more than 5% for this are already trading incorrectly.

We trade in order to profit from the market's prospective, and I have no doubt that not all traders have settled scores with their risk management. Some greedy traders are always looking to acquire everything, but they forget that things don't always go as planned in the space; the market has a way of shocking everyone who is expecting much more, especially addicts. Risk management governs our trades and compels us to consider how much we are willing to lose and gain. Knowing both is a delicate balance, and the risks are well worth it.

[justdimin]

I was thinking about this saying "Huge risk = huge rewards" but it was too opposite from what we want instead, we are looking for Less Risk but huge rewards. That is why only a few people succeed in trading as they can't accept the challenge and manage to handle stress. As we can see, many traders quit and become holders, but that was a good escape rather than leaving crypto forever.

Risk is not eliminated in trading but it is reduced when we use proper risk management. Agreed that some people have left trading to hodling and that is basically because of the trading mentality of profiting 100% without thinking of losing so they losing but having in mind that it is less risk and huge profit. Market trading can not be without risk and losses and it is better setting your loss limit.  One important factor of stop loss is it stops you from losing all your capital.

I am one of those people, I left trading and I became a long term holder, that's a lot better for me and so far I have made better returns that way as well. Trading is something that requires studying, learning, a lot of indicators, chart reading technical analysis and many other stuff along with a lot of news, some of them bad and make it go down and all these matters and you need to be great at it in order to be a good trader that makes profits.

What makes a good long term holder? Literally just forgetting that you invested, we heard all those news "guy invests into bitcoin 10 years ago, forgets about it, founds his keys and suddenly a millionaire!" well that's it, that's a long term holder, involuntary long term holder but that's all you gotta do.

[sana54210]

As traders, there is an amount of money we are comfortable losing and there are some we just can afford to lose. The most important things I learned from risk management are risk tolerance which refer to the amount of money you are willing to risk on one specific trade. Then, I also learned which is followed from the first is how to effectively and correctly initiate stop loss orders to prevent losses. Lastly, learning how to calculate my position size very quickly. Any newbie who can get a grasps on these strategies and be able to implement it, they are sure to have a good trading journey.

I think you should be trading with the money you are  comfortable using to begin with. ALL the money you have on any given time at the exchanges should be money you are willing to lose. Either because it would be smart since exchanges could get "hacked" or just scam or even have legal troubles, or it would be smart because you could trade and lose it as well.

I believe that it would be a smart decision that you could end up making a big deal out of this, and should be remembering what to do, I believe that we could be doing something that benefits you if you could just use money you can lose. Not just some part of your budget that you can lose and not care, but all of it that you can lose and not worry about what to eat tomorrow, that's how it should be done.

[irhact]

The use of stop loss may not be profitable to scalpers. Especially when the join a trade that is about to retrace unknown to them and it triggers their stoploss before moving in the main direction. Stop loss is best practice for day traders or position traders for scalpers they just have to monitor their trades and be disciplined enough to know the exact amount they are willing to lose from a trade and them take their profit and loss decision based on that.

When you're actively trading and monitoring the market, you don't need to have a stop loss in your trade. Stop loss are only needed when you'll not be actively monitoring the market. The stop loss helps you end a trade before it starts giving you losses. Stop loss can also put you in losses when it gets triggered before the market reverse and continue pumping. Stop loss should always be adjusted so your order don't end in losses.

Risk management when trading is very important, without it you'll lose all your money. The very first risk management I knew was not to invest more than you can lose into the market. Then always take profits while trading, don't be greedy or you'll regret making that decision.

[Inwestour]

I think you should be trading with the money you are  comfortable using to begin with. ALL the money you have on any given time at the exchanges should be money you are willing to lose. Either because it would be smart since exchanges could get "hacked" or just scam or even have legal troubles, or it would be smart because you could trade and lose it as well.

If I am not a day trader, then I do not have to keep my coins on the exchange all the time, I can deposit money on the exchange, buy coins and withdraw them to my wallet. This should eliminate the risks that you are talking about and it gives you the opportunity to trade not only with money that I are ready to lose.

I believe that it would be a smart decision that you could end up making a big deal out of this, and should be remembering what to do, I believe that we could be doing something that benefits you if you could just use money you can lose. Not just some part of your budget that you can lose and not care, but all of it that you can lose and not worry about what to eat tomorrow, that's how it should be done.

I very often see when someone says that it is worth trading, or investing only the money that you are ready to lose. But do you really believe that something can come of it, do you believe that it can be enough to achieve good results in trading, or investing?

Maybe it all depends on financial capabilities, and someone can lose a lot of money without much damage, but it seems to me that for the most of users here, the amount they are willing to lose is quite insignificant. And in order to achieve tangible results, it is worth taking certain risks, otherwise nothing will work.

[TheGreatPython]

If you want to reduce risks, then you need to not participate in risky trading transactions on the crypto exchange and understand the consequences of risky transactions.
But in less risky trades, there is little profit and a lot of time spent on trading. Classic traders do not use more than 3% of capital for risky trading, and those who use more than 5% for this are already trading incorrectly.

We trade in order to profit from the market's prospective, and I have no doubt that not all traders have settled scores with their risk management. Some greedy traders are always looking to acquire everything, but they forget that things don't always go as planned in the space; the market has a way of shocking everyone who is expecting much more, especially addicts. Risk management governs our trades and compels us to consider how much we are willing to lose and gain. Knowing both is a delicate balance, and the risks are well worth it.

Patience and consistency are the most important aspects and one should have these two if they want to be successful in cryptocurrency trading. Greed is something that will always take you towards the negative, when you need to close a trade and take a profit, your greed will stop you and tells you that you can gain more from it, and if you listen to it, your trade will most probably go into negative and you lose the profit along with a part of your invested capital.

In very rare cases, you might get more profits if you don't sell at your target price, but it is not recommended at all. You should always sell when the target is reached, especially if you are trading in altcoins because they move so quickly and if they can go up quickly, they can come down at the same pace as well.

[Lida93]

 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.

Focusing on both risk and reward would be more safer as you would have to weigh your reward against the risk am to incur. Focusing only on the risk could make you lose sight of the size of the reward you're taking the risk for, thereby  taking risk that doesn't match your potential reward.

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

For a trader with a little amount setting up a SL and TP is very sacrosanct in managing and minimizing your supposed loss that could clean up your account.

[RewFrew]

Yes Risk management is very important for crypto trading. Without proper knowledge about risk management there has huge possibility to loss our valuable fund. I think we have to follow some things to trade to avoid loss Fund like

* Never we use all fund at a time in trade.
* Never we will Crazy in trade.
* We have to avoid greedy.
* Always use stop loss and take profit.
* Never trade opposite of market train.
* And we have to cool when we trade

I think if we follow that's we will capable to reduce risk. To avoid loss our valuable fund we have to do proper risk management. Otherwise we loss our valuable fund.

[ItsCrafty]

We trade in order to profit from the market's prospective, and I have no doubt that not all traders have settled scores with their risk management. Some greedy traders are always looking to acquire everything, but they forget that things don't always go as planned in the space; the market has a way of shocking everyone who is expecting much more, especially addicts. Risk management governs our trades and compels us to consider how much we are willing to lose and gain. Knowing both is a delicate balance, and the risks are well worth it.

I agreed with your described fact.I think that Risk management in trading cryptocurrency involves implementing strategies to moderate potential losses and protect your investments. Many traders diversify their portfolio by investing in a range of cryptocurrencies to reduce the impact of any single asset's volatility. Setting the t stop-loss orders helps limit losses by automatically selling an asset when it reaches on the predetermined price or level. It also depends upon the implementation of your technical strategy and proper position sizing techniques ensures that no single trade carries too much risk. Additionally, you can reduce certain possible risks by keeping an eye on market trends, news, and technical indicators. Effective risk management in cryptocurrency trading requires a systematic strategy, exhaustive research, and ongoing oversight.