In the crypto world, how to 'survive' and 'thrive', scientific trading risk management is your confidence!

1️⃣ Accurately formulate a risk plan to strengthen the financial safety line

Before trading, it is necessary to clearly plan two core contents:

1) Financial risk planning

Based on your total capital and off-market income situation, set reasonable risk tolerance ratios for individual trades and overall. Professional traders usually control the risk of each trade within 2%, with total losses not exceeding 10% for the month. Once the red line is reached, decisively pause trading for review and reflection.

2) Psychological risk planning

Trading is essentially mechanical operation, but emotions are inevitably a factor. It is essential to formulate a risk plan based on your psychological endurance, ensuring that the trading plan aligns with actual psychological tolerance.

2️⃣ Grasp the essence of the risk-reward ratio to enhance trading profitability

Trading is not merely about market predictions but about precise control of the risk-reward ratio. Each trade's entry, exit, stop-loss, and take-profit should be based on a scientific plan. By reasonably setting stop-loss and take-profit points, clarify potential losses and profit space to improve overall trading win rates with appropriate risk-reward ratios.

3️⃣ Follow the trend for rational profit-taking, locking in gains to avoid drawdowns

1) Trend judgment and position strategy

Market trends develop gradually from smaller levels. Traders should set different targets based on trading cycles. When a major trend occurs in a smaller cycle, a gradual position reduction strategy can be used to let profits continue to grow.

2) Setting profit-taking targets

Set common risk-reward ratios as reduction points. If it is difficult to predict a clear target, reducing positions proportionally can effectively lower the risk of profit loss due to market fluctuations.

4️⃣ Perform subtraction of trading capital to ensure long-term trading vitality

When certain profits are achieved in the trading market, it is wise to withdraw part of the principal promptly. Market opportunities abound, and preserving the principal ensures there is continuous capital to participate in the market, laying the foundation for achieving larger profit goals.

$BTC