Hello Binance Square community! 👋

Making money from crypto is always appealing, but what matters most is protecting your capital. In this volatile market, a good trading strategy without strict risk management is like "walking a tightrope" without a safety net.

Today, I want to share a basic yet extremely effective risk management strategy that everyone should know: The 1% (or 2%) Rule!

The 1% (or 2%) Rule: Maximum Capital Protection

This principle is very simple: Never risk more than 1% (or a maximum of 2%) of your total trading capital in a single trade.

Real-life example:

* If you have 1,000 USDT in your trading account, you should only accept a maximum risk of losing 10 USDT (1%) or 20 USDT (2%) for each trade.

* This means that when you place an order, you must calculate the position size and stop-loss point so that if the order is stopped out, the amount you lose does not exceed 1% (or 2%) of your total capital.

Benefits of the 1% Rule:

* Protecting your account: This is the strongest shield that prevents you from "blowing up" your account after just a few consecutive losing trades.

* Stable psychology: When you know you're only risking a small portion, you'll trade more calmly, not be driven by fear, and make wiser decisions.

* Recovery opportunity: Even if you lose 10 trades in a row (which is very unlikely if you have a strategy), you still have 90% (if using 1%) or 80% (if using 2%) of your capital left to continue trading and recover.

* Sustainable growth: Good risk management helps you grow capital slowly but surely, instead of "getting lucky" with one big trade and then losing everything.

Practical Application:

* Define entry point, stop-loss point, and take-profit point.

* Calculate position size: Based on the stop-loss point, you will know how much of an asset you can buy (or short sell) so that the loss does not exceed the 1-2% limit.

* Maximum risk amount / (Entry Price - Stop-Loss Price) = Position size.

Risk management is not as flashy as "x100 leverage", but it is the foundation of survival and sustainable success in the crypto market. Make risk management your top priority!

What risk management strategy do you apply to your trades? Share your experiences in the comments below! 👇

⚠️ Disclaimer: This article is for educational purposes only, sharing experiences about risk management and is not financial or investment advice. The cryptocurrency market is very risky, and you can lose your entire investment. Always do your own thorough research (DYOR) and consult financial experts before making any investment decisions.

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