Topic: How do you manage risk in crypto currency (Read 238 times)

Risk management in crypto currency, position size calculator for crypto currency,the most important part of trading strategy. Without it you risk losing all your equity. This calculator is a great tools for any new or expert crypto trader for example formula 1 crypto account size-this is the total USDT, bitcoin,erhereum or any other coins you use for trading.
2 Entry price-this is the limit price at which your trading tell you to go either long or short team.
3 stoploss price-this is the  price of your first stop loss to get hit of the position if it goes against you if you don't know where stop loss should be it will show us how to determine your crypto stop loss.
4 maximum risk-this is the maximum risk in percentage that you are willing for each trade example risk between 0•5% and 1•5%.strategy, 0•5%-1•5% will keep your equity safe from the high volatility of the crypto market. Let's see example below for long position for BTC/USDT.
Account size,1000 USDT
Entry price, 30,000 USDT
Stop loss price, 28,000 USDT
Max risk %,1•5%
(1000×(1•5×0•1))/(30,000-28,000)×30,000=225 USDT
Let's take it apart,
Account size(max risk %×0•1))(1000×(1•5×0•1))=15 USDT, this is the maximum amount that we are willing to risk on the trade.
(Entry price-stop loss price) (30,000-28,000)=2000 USDT,2000 USDT is -this is the amount we would loss if our stoploss was hit and we had bought a full BTC.
(Account size(max risk %×0•01))/(entry price-stoploss price)
15/2000=0•0075 this is the only amount of BTC that you should buy in order to only lose 15 USDT (1•5%of your account size) if your trade hits the stoploss.
Account size (max risk %×0•01))/(entry price -stoploss price)×entry price 0•0075×30,000=225 USD multiplied by the amount of BTC you want to buy.
Here is the source here

We are not able to calculate the risk because we are not involved in trading altcoins, maybe a lot of investors' losses are affected by the previous investments of FTX and Luna.

But I commend your investment strategy for long-term gain, I think there is no need to hesitate for the price of bitcoin in the next 5 years, you must have diamond hands to hold assets unaffected by any news, make sure you allocate investment funds that are capable of long-term investment..

It's impossible to calculate because the price is heavily manipulated. You'd also have to take into account the possibility of a black swan event like covid or FTX.

I don't manage risk because I don't trade and I advise you to do the same. I invest and acknowledge that it can take another 5 years before there's any profit. I'm ready to wait up to 10 years, but I'm sure bitcoin will get me in a much better financial situation than holding my money in the bank with 10% inflation would. 

Op it is just a simple arithmetic, the risk management in any business is paramount. There are some homework you have to do before investing. You have to know the risk ahead and also the profit which is out come at the end of the investment. Those are some the calculated risk an entrepreneurs are saying. Now investment you to monitor the market and invest in it when the market is on bear. Purchase your crypto when the market is low so that when the market goes up you can sell it and wait for a bear market again or after selling them in the bull market, you can switch over to trading to avoid spending of the Capital while waiting for another bear market.
While for trading, the risk management is just like the investment but there is slide different. In trading you can buy at anytime buy you ability to monitor the movement of the market to make profit is the major issue. You can set a time frame for the trading, daily, weekly, or monthly. Most of the time I use weekly. All depends on your schedule.

Managing risk must include a number of things that underlie it. Maybe we have learned how to manage risk well, however, one of the things that underlies it is knowledge and also our ability to control emotions. because, no matter how good our risk management is, when we have not been able to manage or control our emotions, sometimes we go beyond the risks we have managed because of our greedy nature and our curiosity, and in the end sometimes we panic ourselves because of our worries.

Knowledge is also very mandatory so that we are able to sort out information and various things that need to be learned. This knowledge will later also support our risk management to be better and wiser. At the very least, risk management is also related to money management, where the thing that we have to do is to manage money so that it is according to our ability to invest or trade, not according to our wishes, but abilities that we can control and afford to loose.

After at least the things above can be done, then we can start managing risks, which can include which coins we should choose for trading or investing, because maybe we will need different coins for both, depending on the type of coin and the target achievement. Apart from that, our ability to analyze the market is also one of the things to manage risk, at least we know at what price we can at least buy and sell it. We can know this if we understand enough about some analysis both fundamentally and technically.

Yes, it is not easy to have proper and good and wise risk management, but as long as we are willing to learn from anywhere, then we might be able to do it. especially if we are able to take various lessons from our own experiences and those of others.

Risk management is a term used to refer to many practices that lead to reducing the possibility of losing your money, and it is an assessment of the extent of the risk that you intend to invest in.
First of all, you must learn the basics about how Bitcoin works and how to secure your account, which includes how to create a wallet, cold storage, reduce transaction fees, and choose a good platform with reasonable fees.

Then comes the diversification of investment, which is not to put eggs in one basket so that you diversify your investments in many sectors such as gold, real estate, stocks, and others.

Then invest only in Bitcoin and avoid investing in alternative currencies if you do not have enough knowledge.
And managing psychological factors, which are greed, fear and greed.

Risk management first start with knowing how much an investor is willing to lose, how much profit is fine per investment and when to pull out of the market to avoid been stuck. When this is defined it will be easier to manage portfolios and profits that comes with it.

Once an investor is conscious of the fact investment is all about profit and loss. Even the bull market won't be overwhelming, not to the point of getting trapped in the market. But in real sense risk management differs per individual because we all can't investment with the same amount of capital and everyone has their portfolio preferences.

First of all, be well informed about your investment and learn how to analyze the market. These are the basics of any investment.
Based on your analysis of the market situation, invest your free financial resources, but be aware that any investment is always risky and that there is a real possibility of losing money.
Before investing, you must make a financial investment plan and have a clear exit strategy.
It is recommended that you never invest all your money in one investment, but diversify your investments, usually into different asset classes.
So, invest something in crypto, something in stocks, real estate, gold, business start up etc.

There is nothing to calculate here, invest only what you can afford to lose, that's the perfect risk management, either investing or trading, always know your limit. Imagine you worth a 10,000$ in your bank account and you play around with 100$ on crypto, how will that hurt if anything goes wrong? You lose money but not your life savings, take risks with very low amount of money.

The safest crypto investment is Bitcoin, others are riskier.

it seems everyone has explained at length about how to manage risk in cryptocurrencies, but the OP didn't appear after a lot of comments. does the OP still need more comments and better suggestions?
and you can be sure, to manage risk for each trader will be different, because the needs and abilities of each trader are different. this would be a more complex solution answer. Your OP should do some research first and decide which management strategy you are going to use.

Having an exact calculation is impossible to provide because of crypto volatility. Also you should provide your risk tolerance since risk management is highly dependent on your tolerance. The best to have this kind of calculation is to consult a financial advisor especially if you are investing significant amount of money.

Asking random people without any idea on your portfolio and risk tolerance is useless because we have different preference based on our risk tolerance. My own risk management will not gonna work with same with others.

Personally I don't follow anybody recommendations instead I develop one for myself. I believe the industry is still very new for there to be any qualified professional to seek advice from. Most of the risk management guides are quite a general knowledge that you get from other markets like the stock, forex market or life in general. For example, you should never invest in what you don't understand or invest more than you're comfortable losing just incase the investment was to go wrong. You can always development a guidelines that works for you based on your own financial capabilities.

Is okay to make mistakes along the way and correct then as you get more experience in the market. This mistakes should build you instead of breaking you that's why you have to make sure this mistakes aren't too expensive ones like storing your coins on exchanges or using centralized wallets that can be easily hacked. One risk management I deploy is my investment in Bitcoin. It's okay to explore the market but always make sure you never neglect Bitcoin.

For investor:
If you hold Bitcoin, the risk is very low.
If you hold shitcoins, the risk is very high.

As for trader it's subjective, you can trade Bitcoin or shitcoins, but you need to accept 100% lose if you want to trade with shitcoins.

I think it's really stupid if you want to invest in shitcoins because there are a lot factors can make you will lose all of your money e.g the coins is scam, the coins got hacked, can't survive in bear season etc.

It's good you ask about how to manage risk in cryto currency,although you have to believe and know more about investment, investing in cryto currency isn't too difficult, but the first thing you need to understand is that you can hold your coin for a long period of time due to the dumplings, and also know the type of coin to invest and invest a little bit of money, like during your investing, out of your 100% funds invest 60% or 70%, don't invest all of your funds and remain cashless, cause of your financial problems.

There's no one-size-fits-all formula for this knowing that every single one of us here have different risk tolerances and different financial situations. Maybe start out with not investing money you can't afford to lose.

You can search on youtube or google but here is mine.

1. Using "Cold" Money -> meaning money that you can afford to lose
2. Always Do your own research some youtube or crypto influencer is "Shilling project " <- They get paid for doing so.
3. Fundamental First and then do technical analysis believe me some news out there can shake the market even if you good technical analysis
3. Only using 2% max 10% of the balance when doing entry or buying coin/token
4. Greed and Fear are always your enemies Know when to take profit know when to take stop loss
5. Have patience, Calm, and pray 

I just consider three things to manage the risk in crypto:

• Never spend money in crypto that is for your family, bills, and monthly expenses
• A profit is a profit small or big, always take profit
• Never gamble everything always have some extra, for other coins

These things might be a little straight forward but this will help you a lot in the future, and will not put your love once at risk.

Just avoid any trade or action that you dont understand all implications. Avoid "get Rich Quick scheme" or 99.99 % of crypto coins on the market. But probably the "real" first of all be ...ready to learn and later be ready to earn!

For crypto investment. The first risk management is excluding shitcoin go for the best crypto investment which is Bitcoin, using the DCA investment concept based on your earning, and taking your crypto off the exchange.
For crypto trading, I believe the below link will help.
https://cointelegraph.com/trading-for-beginners/a-beginners-guide-to-cryptocurrency-trading-strategies
https://academy.shrimpy.io/post/risk-management-guide-for-crypto-traders

I very rarely calculate risk management in cryptocurrencies, but I always try to minimize the risk by implementing the following methods;

• In one investment product, it's better not to put all your funds, but you can have a diverse portfolio.
• Then, you must be calm when facing investment risks that occur.
• So, avoid panic as much as possible, because panic will make you wrong when making decisions.

In essence, when you invest in any product, there will always be risk. Therefore, you must be able to understand investment risk management well. And you can also recognize several types of risks on this Source: ocbcnisp.com