Managing risk-reward ratio is crucial in crypto trading due to the market’s high volatility. A smart approach starts with defining your acceptable risk per trade—commonly 1–2% of your capital. This ensures no single trade can wipe out your portfolio. Set clear entry, stop-loss, and take-profit levels before placing a trade. A good rule is aiming for at least a 1:2 risk-reward ratio, meaning you risk $100 to potentially earn $200.
Use technical analysis to find strong support/resistance levels and avoid emotional decisions—stick to your strategy. Diversify your portfolio to spread risk across assets, and never “go all in.” Utilize tools like trailing stops and position sizing calculators to adjust your exposure as needed. Lastly, review your trades regularly to understand what works and refine your approach.
In crypto, risk can’t be eliminated, but it can be controlled—and that’s the difference between gambling and trading smart.