Risk Management: Preserving your capital — Crypto Trading
Not a Medium Member? Join here to support both my writing and other great content creators. Thank you!
Before entering the markets, every trader needs learn a few concepts. Risk management, in my opinion, is at the top of that list, because what are we doing if we don’t protect our capital? Putting our future at risk?
Risk management is essential in any industry and is a critical component of success. Many traders assume that understanding risk management tactics is unnecessary until they trade with larger positions, however THIS IS FAR FROM THE TRUTH. If you want to maximize your profits, you must manage your risks and limit your losses.
Remember that you will lose trades and make poor decisions! Professional traders with a track record of success make poor decisions. Closing a trade with large winnings can cloud your judgment and cause you to overestimate your next trade. It’s not something to be ashamed of; it’s all part of the game. In this short article, I will outline a few distinct risk management tactics, as well as what to avoid and how to master them.
We will look into:
- Position sizing
- Stop Loss and Take Profit