#RiskRewardRatio

How to Manage Risk-Reward

✅ Diversification – Don't put everything in crypto; allocate only a % of the portfolio (5% to 20%, depending on the profile).

✅ Focus on Established Assets – Bitcoin and Ethereum have less risk than altcoins.

✅ Stop Loss and Take Profit – Set limits to protect gains and limit losses.

✅ Do Your Own Research (DYOR) – Understand the project before investing.

✅ Be Careful with Leverage – Margin trading can amplify gains, but also losses.

Conclusion

Cryptoassets offer one of the highest risk-reward ratios in the market:

High Risk: You can lose everything if you invest poorly.

Potentially Huge Reward: Exponential gains in bull markets.

Recommendation: Only invest what you are willing to lose and have a clear strategy (HODL, trading, staking, etc.). If you are conservative, prefer Bitcoin and Ethereum; if you are bold, do thorough research before entering altcoins.

The choice of the ideal risk-reward ratio (R/R) for investing in cryptoassets depends on your risk profile, strategy (trade vs. hold), and the type of asset (Bitcoin vs. altcoins). Here are some common approaches:

1. Classic Ratio for Traders (Day Trade/Swing Trade)

1:3 to 1:5 (For every 1% of risk, aim for 3% to 5% of gain).

Example: If you set a stop loss of -10%, your take profit should be +30% to +50%.

Recommended for:

Volatile coins (altcoins in bull market).

Momentum or breakout strategies.

1:2 (More conservative, common in Bitcoin and Ethereum).

Example: Stop loss -5%, take profit +10%.

2. Ratio for Long-Term Investors (HODL)

Here, the focus is not on a fixed ratio, but on fundamentals and time horizon.

Risk: Can reach -50% to -90% in bear markets (e.g., Bitcoin dropped 80% in 2018).

Potential reward: +500% to +10,000%+ in bull cycles (e.g., BTC increased 20x between 2020 and 2021).

Strategy:

Buy on strong dips (e.g., after drops of 50%+).

Partially sell at new ATHs (All-Time Highs).