Risk management in trading is $BTC
$BTC
Basic Principles:**
- **Capital Protection:** Your primary goal is not quick profits, but to preserve your capital.
- **1% - 2% Rule:** Do not risk more than **1% of your capital** on a single trade (for beginners), or 2% for professional traders.
*(Example: If your capital is $10,000, do not lose more than $100 on the trade)*.
- **Risk/Reward:** Only enter a trade if the expected profit ratio is ≥ 3 times the potential loss (1:3 or better).
*(Example: You risk $100 to gain $300)*.
### 2. **Practical Risk Management Tools:
- **Stop Loss Orders:**
- Set them **automatically** upon entering the trade.
- Determine them based on technical analysis (support/resistance levels), not on your emotions.
- **Position Sizing:**
Use this formula:
Position Size = (Capital × Risk Percentage) / (Entry Price - Stop Loss Price)
- **Diversification:**
- Do not put all your capital into one asset or one sector.
- Spread your investments across uncorrelated assets (stocks, currencies, commodities).
