🏆 SOME BASIC RISK MANAGEMENT PRINCIPLES IN CRYPTO INVESTMENT/TRADING THAT CAN BE EFFECTIVELY APPLIED IMMEDIATELY:
🔑 1. The 2% (or 1%) Rule
✔️ Never risk more than 1–2% of total capital in a single trade.
🔹 Example: You have 10,000 USDT → each trade should only accept a maximum loss of 100 – 200 USDT.
✔️ This allows you to be wrong multiple times while still having capital to recover.
🔑 2. Always Set a Stop Loss
✔️ Do not “hold onto hope” that the market will reverse.
✔️ Determine the stop loss level before entering the trade and adhere to it absolutely.
🔹 Example: If BTC is priced at 60,000 and you plan to buy, set a stop loss at 58,000 (a loss of $2,000 for each BTC) before entering the trade.
🔑 3. Reasonable Capital Allocation
✔️ Do not go “all in” on one coin or one trade.
✔️ Principle: diversify → 50% BTC/ETH (safer), 30% potential altcoins, 20% stablecoins for opportunity backup.
🔑 4. R:R Ratio (Risk : Reward) of at least 1:2
✔️ This means if you accept a risk of $100, the expected profit must be at least $200.
✔️ If R:R < 1:2, then do not enter the trade, as over the long term you will incur losses even with a high win rate.
🔑 5. Manage Your Psychology
✔️ Do not FOMO when prices spike.
✔️ Do not “hold onto losses” when prices go against you.
✔️ Do not revenge trade (trade to recover losses).
👉 In summary: Capital management + stop loss + discipline = long-term survival. In crypto, preserving capital is more important than making quick money.
