Risk framework for Nigerian Traders

[casey15]

We now know that crypto trading has become very rampant in the country and almost every young Nigerian you see is basically aware or almost involved in crypto trading. While it comes with unique opportunities, crypto trading has its own unique risks. These risks can be due to bank restrictions, market volatility and a lot of traders lose funds not because they lack the necessary skills but because they basically lack risk structure.

One aspect of crypto trading that a lot of people neglect is Risk management they feel once they have money and just pump it into the market it is going to give them large returns risk management is what keeps you in a market for so long and makes you consistently active in the market.
Here is a structural breakdown of a risk management framework that can be applied by Nigerian traders wether you are just coming in or you are a seasoned trader looking to have a risk management structure.

Never trade with money meant for:
* Your rent
* your school fees,
* your medical expense, and
* your business money.


A common structure you can follow when you have a trading capital is this:

* 70 to 80% of that money should be for long-term holdings if applicable : The money  should be used to hold a crypto assets which in this case Bitcoin as this is one of the most reasonable investments pattern
* 20 to 30% of the capital should be used for active trading, your normal day trading whether you are swing trader or a scalper
• You should risk only 1-5% of your capital per trade. This will give you enough room for losses so you don't blow your account on a single trade.
• Avoid revenge trading. Don't attempt to open more positions when you are already in a loss.
• Be logical and used fixed sizing. Emotions in trading can prove to be dangerous sometimes.
• Have an entry and an exit plan. Learn to use a stop loss. A lot of traders do not like using a stop loss. Know the maximum loss you are willing to take in a single trade. Without this emotions can easily control your decisions
• Don't copy trade influencers blindly. You should have your own strategy to know why the market is behaving the way it is.

These are a few things that will help you manage your risks as a trader.
Other suggestions from seasoned traders will also be appreciated.
Stay safe out there. Protect your capital, it is what matter most.

[Mia Chloe]

~snip

Most of the stuff you mentioned are straight up normal forms of discipline a trader should have. Taking a trade automatically means you are accepting that you can lose that money so if you are not ready to lose that money don't take the risk. People are too hung up on profits.

Well then again risk management might be misinterpreted by a lot of persons people think risk management is over managing their capital but it actually means risking only when necessary.

[AYIMAN]

The biggest risk that a trader or traders should really put in check is *scammers & fraudsters*both online and offline.

These set of people are everywhere both online and offline. So as a trader, once you are able to identify scammers and fraudsters and put them under control trust me you are good to go. As a trader,you can manage any other risk that you can think of in business but if you mistakenly run into scammers or fraudsters,you will surely start from square one again because those people don't have conscience.
Just within a minute,they will sweep everything you have suffered for a long period of time to sero.

So they are the most dangerous risk in any kind of business as long as trading is concerned in Nigeria.

[SatoPrincess]

This is a well detailed summary of what to do and what not to do as a trader. Some of it may sound silly but I saw people use their rent, school fees, some even took out loans to invest in MMM and other ponzis. Imagine those people eventually become traders, their high risk-high reward mentality would be their biggest problem in trading.

[Achalugo BTC]

Most of the stuff you mentioned are straight up normal forms of discipline a trader should have. Taking a trade automatically means you are accepting that you can lose that money so if you are not ready to lose that money don't take the risk. People are too hung up on profits.

Well then again risk management might be misinterpreted by a lot of persons people think risk management is over managing their capital but it actually means risking only when necessary.

You are totally right about discipline, which people are finding it difficult to exercise it in their business or whatsoever due to the wrong information they got about it. And if people who involves themselves in getting quick money, they really have to be aware of what they are into, so that they won't make decisions that will hurt them in the future, which they will make to do whatever it takes to be able to manage the risks involved, which doesn't only involve capital but also involves their mindset it. So that they won't be making decisions based on their emotions, which might be misleading at times but be able to manage their mindset can help to keep their emotions in check and help them to stay focused in the market and also its important to verify every information they got, which will help them to avoid losses.

[DiMarxist]

Risk management is the first thing that should come into the mind of anyone who is about trading because trading is something that no one whether old or new traders should enter without having some levels of risk management skills.nust like it's always advisable for investors to invest with only their discretionary funds this should also apply to traders. No trader should enter the market with all the money in their possession but, with only money that should be seen as discretionary funds so that, even if there is loss during the trade the impact on the trader will not be that felt.