Always Practice Risk Management In Crypto Trading

The mistake a whole lot of us always make us the fact that we think head knowledge is enough to trade in the crypto space. If there is something I have come to discover about the crypto space, it is the fact that it is highly volatile. Sometimes, a lot of traders are reckless gamblers and at the end of the day, they pay for it painfully. I always tell people that they should always practice risk management.

When it comes to risk management in crypto trading, it means you taking some certain steps to control your loss so that your capital can be protected at the end of the day. For some people, it can be making use of stop losses, for some people it can be making use of take profit and for some people it can be practicing diversification. All of these things helps you to practice risk management.

One of the most popular misconception people have about risk management is they always think it means you avoiding risk. No that is not what risk management means, in fact, you can not avoid risk when it comes to the crypto trading. Risk management just talk about you managing those risks so that it will not destroy you.

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Every crypto trader that will be successful must always practice risk management. Crypto is highly volatile because of the price movements. From my little experience in reading, I discovered that sometimes you can even be right in your technical analysis and still lose money at the end of the day. In fact, you can have a winning strategy and at the end of the day result to massive loss if you are not able to control your risk.

Like I said earlier, when it comes to the crypto space, there are a whole lot of things you can do to practice risk management. You can practice stop loss. In fact this is what I wish I knew in my early days in trading. The second form of risk management is Diversification. I wrote about it in my last post. Diversification simple means spreading your capital to other assets so that you will not put all your eggs in one basket. The last one which a lot of us always ignore most of the time is controlling your emotions. In fact this is the reason why a lot of traders are not been profitable because they can't control their emotions and at the end of the day, they result into massive loss.