Key Risk Management Strategies
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Risk management is the fundamental pillar of any sustainable trading strategy, especially in volatile environments like cryptocurrencies.
Here I share a set of strategies that you can integrate into your operations, aligned with your technical and structured approach:
1️⃣ Position Sizing
- Predefine the percentage of capital you are willing to risk per trade (e.g., 1%–2%).
- Use this formula:
Position size = Capital × % risk / (Entry - Stop Loss)
2️⃣ Use of Stop Loss and Take Profit
- Set SL levels based on technical zones (market structure, Bollinger bands, dynamic support/resistance).
- Adjust TP according to likely scenarios with a minimum risk-reward ratio of 1:2.
3️⃣ Diversification
- Avoid concentrating all your capital in a single asset or strategy.
- You can use correlations between pairs to balance exposure (BTC and altcoins, indices, stablecoins, etc.).
4️⃣ Do Not Increase Losses (Anti-Martingale)
- Never average down on a losing trade without revalidating the technical context.
- Instead of doubling, wait for technical confirmation for a new entry.
5️⃣ Analysis on Multiple Time Frames
- Confirm your bias from higher time frames before entering lower time frames (e.g., 1D → 4H → 1H).
- This avoids impulsive entries in weak or unstructured zones.
6️⃣ Trading Journal
- Document all your trades: setup, time frame, emotions, mistakes, and successes.
- Post-analysis helps you refine your approach and detect recurring patterns.
7️⃣ Emotional Control and Clear Rules
- Trade under predefined rules, not by momentary intuition.
- If there are 3 consecutive losses, you may consider pausing and evaluating.
Remember:
Cryptocurrency trading carries a high risk. (DYOR)
vc_custy
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