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Managing risk in crypto

5 min read

Over 90% of new crypto investors will lose money and the biggest reason is simply poor control of risk which leads to emotional trading and poor decision making. So when you consider all of this, risk management in crypto is one of the most important aspects to understand and master. Before you advance to more complex trading methods such as using a sniper bot e.g. Pancakeswap Bot, it’s imperative you learn to trade in more traditional ways and manage your portfolio accordingly.

The easiest way to master it is to divide the deposit into several parts, then buy a part of some currency (it can be of any size – its quantity depends on your own volatility), and hold it for several months.

Sooner or later you will gain some experience and become more confident in making trades.

If you feel like you are ready to trade, you are welcome to leave some funds on exchanges to work with, or maybe try to trade some altcoins.

So, how to avoid this?

First of all, don’t take big risks. Take a look at your deposit, and determine that % of it you’re willing to lose. Then introduce this number to your risk control strategy.

So you’re a new crypto trader and you want to try trading. But where do you start? What are the basics? First and foremost you must understand what trading is.

Using Stop Loss (SL) is the most preferred way to manage risks, but it may lead to a downfall as well, if you don’t make any other attempts of risk management. Using Stop Loss may lead to another risk that is called “trailing stop loss”. Generally, it refers to the practice of trailing your stop loss in order to track the price, as it goes down.The term “risk management” may be understood in different ways by different people. We’ll try to explain it in 2 simple steps:

1.         Identify your weaknesses and strengths – the only way to manage your risks is to be honest with yourself.

2.         Put a strategy in place – a proper trading strategy is a key to success in any trading field, and cryptocurrency trading is not an exception. Before we talk about risk control methods, let’s see what the definition of risk management is. In finance, risk management is a discipline of identifying and quantifying financial risks. Once risks are identified, risk management seeks to identify the probability of occurrence, the potential loss if it does happen, and the impact if the risk does happen. It helps investment decision-makers select trading and investment strategies.

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