Risk Management :
It is part of the process of investing and trading in financial markets, including the digital currency market. There are several strategies that can be used to manage risk effectively. Here are some basic strategies:
1. **Diversification**:
Distributing investments across a variety of assets to reduce risks reduces the impact of the negative performance of any individual investment on the portfolio as a whole. For example, investments can be diversified between Bitcoin, Ethereum, Solana and other cryptocurrencies.
2. **Set a loss limit (Stop-Loss Orders)**:
Place automatic sell orders at a certain price level to limit losses. It helps protect capital by reducing losses when the market moves in the opposite direction to expectations.
3. **Allocate a small percentage of the wallet to digital currencies**:
Investing only a small portion of the total portfolio in cryptocurrencies.
It reduces the overall risk of the portfolio, as cryptocurrencies are known for their high volatility.
4. **Position Sizing**:
Determine the size of each investment based on a specific percentage of capital.
Reduces risk by controlling the size of trades. The size of the investment can be determined based on the acceptable level of risk.