As a trader, do you stick to your risk management or maximise profits

[The Cryptovator]

A lot of traders usually have a proper risk management approach they use in the market which serves as their guide to protect their capital and also manage their resources well in the market. The strategy that a trader uses to enter a trade in the market is usually their guide to enter a new trade, when it meets all their criteria to be a trade worth taken for them.

Risk management – that’s what I still have been learning. Even traders want to manage their trading risk, but eventually all the traders can’t manage. For me, I have failed a couple of times to manage the risk of my assets. Couple of times I have seen a bull market; every time I can’t manage the risk. Sometimes failed and lost as well.

Most of the time traders focus on maximising their profits, then they forget to manage the risk. That’s how I have failed as well. I am struggling to learn; instead, just focus on maximising the profits. We also need to manage the risk. It doesn't necessarily mean the market will react as my plan.

[knuckey]

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

For me, a risk-focused approach is far more important than maximizing profits; I typically use a 1-to-3 strategy—risking 1% for a potential 3% gain. Even after three losses, a single win allows me to break even. The returns might not be huge, but the sense of satisfaction is always there, and my capital isn't rapidly depleted.

[AVE5]

A lot of traders usually have a proper risk management approach they use in the market which serves as their guide to protect their capital and also manage their resources well in the market.

Risk management is important to be adhered to so that when we approaches the market, we can always control our emotions and capitals in order not just to prevent making wrong choices but to risk with what we can afford to loose without being trapped handicap because, no matter how we tend to take precaution measures on the risk factors, we're still vulnerable to experience bad times of loosing if we must continue trading in the long term and doesn't have to quit if we were lucky to make some profits from a start.
Proper risk management will also ignite you that not all market opening or risks are worth taking, you can let some which isn't well define to you slide.

[Questat]

Some well experienced traders do that despite of its risk, as long as they find confidence with its possible outcome. But if you are a trader who stay out of putting your account into a risky outcome, then stick to strict risk management even if it means not getting maximum profits.

Trading is still highly risky and unpredictable no matter what angle we see it. So its better to be safe than sorry.

[Asiska02]

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That's a very straightforward question. Seems like you have faced this situation multiple times now. Well, I have also faced these situations multiple times, and if we follow our discipline and strategy, which tells us to not invest more than X% in one trade, I used X because everyone has a different value for it.

So, let's say I have 10% of all my capital that will be used to trade just one pair, but that one pair is now showing good signs of making me a good profit. So should I increase leverage or add more capital? In such situations, our discipline and strategy will tell us not to do it.

But our greed, our guts are saying, "Let's do it, and if anything bad happens, we will close the trade without wasting a second." But that is just bait. If you are experienced enough, you can increase capital or leverage, but always be careful and use an SL. Don't say, "I will close manually," because now you are risking more.

This sounds relatable and it happens to me also in trading. Even when you decide to put SL in your trade, as long as it is not placed in your invalidation zone for SL at the start of the trade applying the proper risk to reward ratio you set for every trade, you may be stopped out even before reaching that zone and will be a loss trade. 

No matter how you wanna try to be smart and want to apply proper risk management while trying to maximize profit, once the trade fails to go your way as predicted, you’ll be faced with a loss bigger than what you want to risk for every trade.

To me, it is still not bad to want to maximize your profit, but have in mind that it’s a 50/50 thing and you’re well prepared to take the outcome of it just like you were prepared before to accept a loss that can be incurred using your agreed risk appetite.

[Peanutswar]

[...]
Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

I cannot say that my sest up is a top tier but just basic one, currently im a swing trading so i do prefer into a higher time frames in the market so basically right now one of my strategy with the bitcoin is DCA so with the help of MACD and RSI I can now identify what are the key area for the volume, and strength of the market so i can bought more bitcoins the same thing with the other coins I do flip in the market so for me this will took me for a while having a profit gains but lower leverage of 10-15x with this set up but of course requires a huge capital to feel the price change.

[Futurexxx]

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

Overconfidence in trading ruins accounts more than anything else, so it's even unprofessional for any trader to conclude that, since their trading setup has a higher chance of winning, they would now risk senselessly. It doesn't work that way. Personally, I'd ruined countless of accounts due to this, which shows that I've learned the hard way, and I will always advice traders to avoid that self-destruct approach in their trading. Using the approach of "risk against protection" can't be overemphasised, as it is the accurate means to have proper risk and account management.

I agree with your sentiment here bro, because I have gotten a bitter taste of this in the past when I was very confident on a particular trading set up, and as I opened the trade with the initial margin I had in mind to execute that trade,  I started having that feeling that I should add more money since the trade is already going my way, which I did, but just in a split seconds, the trade turned against me and I lost a huge amount of money because the second position I open, I did not set a stop loss believe that it was a sure trade. So you are right when you said that overconfident in the market or on a particular trading set up ruin accounts more than anything else.

[Junii]

What i noticed and realize in the market that technical analysis gives u a probability of a trade it did not gives u guarantee profits. Most of the time a setup looks good and in favor but still ended up in loss because beside technical analysis there a lot of things a person has to  keep in mind to become profitable. First of all discipline. Discipline is to not enter in a market due to Fear of missing out (FOMO) sometimes a setup looks good but when you increase the leverage by thinking like it is a good setup and i have to increase the profits but actually you are increasing the chances of your liquidation. One little wrong move and a person becomes liquidated as a trader if i see a good setup i will not increase my leverage i will follow my risk management.

[Freeveto]

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

I think taking further action by increasing leverage just because we feel it is an A+ setup can be greed because it seems like we want to maximize the profit since the set up was perfect in our opinion, but what if something just happened unexpectedly, we will lose money even though we had the opportunity to take our profit according our first setup.

Growing gradually is the best strategy, if you have a plan that has been working for you perfectly, keep to it, don’t be greedy to make some adjustment that might affect the trade, it is better to wait after your trade, then decide what to do incase if you want to make adjustment in your plan because trading is very risky.

[Findingnemo]

If most traders stick with preserving the capital rather than making more profits then they won't end up busting their accounts but in reality, the exact opposite to it happens. They make profits with a strategy and when it happens, their confidence level will be I am invincible now and can do anything that will end up positive, taking high risky trades, lose their capital, borrowing money and repeat then end up losing again, then being stuck in the debt trap.

In the end, they will blame crypto trading for their situation while the actual reason is themselves.

[Arenga pinnata]

A lot of traders usually have a proper risk management approach they use in the market which serves as their guide to protect their capital and also manage their resources well in the market. The strategy that a trader uses to enter a trade in the market is usually their guide to enter a new trade, when it meets all their criteria to be a trade worth taken for them.

As traders, asides the fundamental and psychological analysis aspect of entering a trade, when these two are not being put into consideration here, or let’s say none is happening at the time and not expecting any news such as NFP and the rest that could trigger the market.

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

I don’t like trying to maximize profits just because I’ve found a good opportunity or moment to enter a trade with a 90% chance of success. I prefer to stick to my usual plan with strict risk management. If I increase leverage just to maximize profits, that also means I’m acting recklessly by increasing the risk I’m taking and that would go against my own risk management strategy. And that might be what’s called greed. So my answer is to stick to my existing risk management strategy. After all, the main goal is to make a profit, and there’s no need to be so greedy as to expect more than that.

[CryptopreneurBrainboss]

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

My risk management values can be adjusted at anytime depending on how I feel about that particular trade. Doing this can favour me at times but other times I don't get so lucky but the ratio of victory gives me more confidence to do it more often. If I was to make a trade that guarantee me profits after my analysis then I won't mind maximizing my profits as that can cover for other times that the trade didn't go as I have predicted. There are also times in which I might just stick to my risk management principles but that's when I'm not over confident about the market moving in that exact prediction. It isn't like it won't have happened as predicted but there are chances other factors beyond our control can have it's effect on the market that changes the outcome of things.

[jossiel]

This gives that deal breaker of making it or breaking it.

If it's me, I won't put too much confidence on myself. Because there can be indicators that can change the result.

As much as I want to maximize the profits, as long as I'm already in profit I won't ask for more because that can also be one factor that might put me into losses if I start to want more and greedy.

I ain't touching it if it's already a fine setup.

[Ziskinberg]

Changing your risk approach just because your trading setup is a top-tier would only mean an increased of risk, because trading after all often comes with unpredictable outcome. Taking leverage in order to maximize the profits will only leave with so much losses when the market suddenly moves to another direction, thus fail to meet your assumptions that you'll end up with a profitable trade.

It would be best to stay on your old approach and stick to the same risk management, than to increase and take leverage, but still lose in the end because the market becomes unstable and change its position, far from your expectations.

[Faisal2202]

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

Yes, I increased my leverage, but I don't trade in futures, so I increased my capital, but this way I am also taking more risk. So, if my setup fails and the market does not follow my setup, then I will be facing a huge loss too. Therefore, this can be a double edged sword, and in this situation, we have to take action with discipline.

But I will say F the discipline, just take the trade. So I will do it regardless of what the losing outcome is going to be, because sometimes I make these dumb decisions when I have some extra cash. Because risk is important in trading, but we should not be naive to lose it all. Therefore, we should cut losses before we have to cut the whole arm. Better to cut the thumb.

[Maslate]

The only key to prevent yourself from losing is to stick with proper risk management, regardless if your trading position is perfectly align with the market's condition. Otherwise, if you let your greed controls you and allow your emotions to rule over your mental knowledge and capacity, you are no longer trading for success and profits, but you are there trading to satisfy what your emotions want to achieve.

Be a trader that does not easily manipulated with your emotions, but trade because you have the skills and strategies to succeed, even if it comes with small but sustainable profits.

[Hamza2424]

No matter how you wanna try to be smart and want to apply proper risk management while trying to maximize profit, once the trade fails to go your way as predicted, you’ll be faced with a loss bigger than what you want to risk for every trade.

To me, it is still not bad to want to maximize your profit, but have in mind that it’s a 50/50 thing and you’re well prepared to take the outcome of it just like you were prepared before to accept a loss that can be incurred using your agreed risk appetite.

If after taking the entry, the market started to dump, in such a situation, which I did not consider before, things change. SL does not matter because we have to give it some time. Therefore, we have to see the market in red as well. We have to wait it out, but if that one price which we know is the major support is broken, we should tap out and sell in loss because this way we can save most of our capital. But if we keep holding it, we can lose more.

But we can also win if the market recovers again.

But if the technical side is 90% a green light, I would definitely risk more. But if the market dumps, I will wait to a specific price range, and even if it won't stay above that range, I will tap out. Simple, we don't have to stress over one single trade.

[Alphakilo]

There's something called the law of large numbers and if as a trader, one gets to understand this law, such a trader would get to see reason as to why it's good to stick to a working strategy, so as to allow each profit from trading executions be much more predictable and stable mostly as the crypto currency market is facing less bullish phases lately.

Using new parameters that involves leverage on an already perfect set-up, introduces emotions that were never there before or have been hidden deep down and it could be the start of a decline in profit margin per trading executions.

[nelson4lov]

~Snipped

Now, with just your technical analysis of the market, after your analysis meets all your criteria’s of taking a trade, an A+ setup trade in this case, do you increase your leverage since the setup is an A+ and will most probably have a 90% chance of success. Do you adjust your risk approach to such trades in order to maximise your profits or you just stick to your normal risk?

Personally, I do fixed risk size of 0.5% of account size per trade for now until I am sure that I have an edge in the market that can swing things in my advantage in the long run. But I recently learnt from a legendary trader like OneLanceB who has made like $100m in verified trading profits that we need to be doing dynamic sizing so that our winners are big enough such that even if they are few, we still end up in solid green. It's a nice approach but I don't think it's for a beginner that doesn't know what an A+ setup is and when is the right time to max the size. Such skill only comes from experience.

[Asiska02]

It's a nice approach but I don't think it's for a beginner that doesn't know what an A+ setup is and when is the right time to max the size. Such skill only comes from experience.

Not everyone agrees that an A+ setup exists, some people believe the trading market is just a game of luck more than it is being a game of skill. From what you’re saying, through experience we can get to spot an A+ setups but can’t be spotted by newbies. I believe there are A+ setups, but it is only your knowledge of the market that makes you get acquainted to it and can spot them out to maximise profits even though they come around once in a while. More professional traders will agree that A+ setups exists and they hardly hit SL without going to the direction as predicted for the market to go and hit profit.