Topic: Why risk management is so important for Every Trader. - page 9. (Read 1597 times)
Risk management is key, no matter how good a traders is at technical analysis if he doesn't apply risk management it's certain he will be in great lose someday, some times analysis might go wrong but with the help of risk management the lose won't cause much damage or having great effect in the portfolio of the trader. Risk management is key without it many people trading with leaverage will liquidate so quickly, in margin trade risk Management helps alot to sustain one's account even when there is a crash in the Market, with risk management your account will still be breathing real good.
Risk management. Financial management. Technical analysis. Experience. from this we will be able to get the maximum benefit from the trades that we do.
The above list is honestly endless; you may add up emotion management, learning from mistake and not repeating same mistake, etc. These things are important as these will help traders for maximizing the profits and at the same time minimizing losing trades. Overall, we can summarize all the required things into two category: good management and good analytical.having experience in emotional control and also believing in the analysis that we have made will make us less likely to get carried away by Fomo or Fud.
Yeah you are right, when you are good at technical analysis then on the event of FUD, you could exit at stop-loss levels instead of waiting for reversal of market direction.
Risk management. Financial management. Technical analysis. Experience. from this we will be able to get the maximum benefit from the trades that we do. Of course, having experience in emotional control and also believing in the analysis that we have made will make us less likely to get carried away by Fomo or Fud. This seldom can be owned by many traders because now many see it only from a technical point of view
risk management for a trader may be difficult and needs to be looked at. but believe in trading to be able to get a profit we don't always have to get 100% but it's better to get less but regularly. So I think your risk management needs to be applied and try to expand your thinking if in trading there must be a minimum percentage of profit, not just a maximum profit as you are worried.
Risk management never gives you a hundred percent assurance that you are in profit all the time, this toll just helps us to guide what could be the best thing to do especially when making decisions. But of course, can't be all in perfection, we can't avoid lapses as we are a human being, it sometimes we have been badly affected by our emotions causes to failure. Whether we like it or not, we can't avoid such a thing and that is more challenging to our part on how to minimize.
risk management for a trader may be difficult and needs to be looked at. but believe in trading to be able to get a profit we don't always have to get 100% but it's better to get less but regularly. So I think your risk management needs to be applied and try to expand your thinking if in trading there must be a minimum percentage of profit, not just a maximum profit as you are worried.
Risk management never gives you a hundred percent assurance that you are in profit all the time, this toll just helps us to guide what could be the best thing to do especially when making decisions. But of course, can't be all in perfection, we can't avoid lapses as we are a human being, it sometimes we have been badly affected by our emotions causes to failure. Whether we like it or not, we can't avoid such a thing and that is more challenging to our part on how to minimize.
risk management for a trader may be difficult and needs to be looked at. but believe in trading to be able to get a profit we don't always have to get 100% but it's better to get less but regularly. So I think your risk management needs to be applied and try to expand your thinking if in trading there must be a minimum percentage of profit, not just a maximum profit as you are worried.
Today Market Suddenly dump, so I explain why need risk management is so important for Every Trader.
📌 If you enter a $100 trade and lose 15%, you’re down to $85.
📌 If you make 15% profit on your next trade, now you have $97.75
📌 It's harder to recover losses than to preserve funds. Don't think how much you can make on a trade. Think of how much you can lose on a trade. Risk-Reward ratio is key.
🎯 Also win % does not make a successful trader, but strategy and risk management do.
For example:
✖️ One trader has a 60% win rate but his portfolio is down 6% using a 2/1 risk-reward.
✔️ Another trader has a 30% win rate but his portfolio is up 12% using a 1/5 risk-reward.
Expect to lose short term. Plan to win long term.
📌 So, it’s necessary to have very strict rules on risk management that help you to always preserve the capital and not to take crazy risks.
📌 If you enter a $100 trade and lose 15%, you’re down to $85.
📌 If you make 15% profit on your next trade, now you have $97.75
📌 It's harder to recover losses than to preserve funds. Don't think how much you can make on a trade. Think of how much you can lose on a trade. Risk-Reward ratio is key.
🎯 Also win % does not make a successful trader, but strategy and risk management do.
For example:
✖️ One trader has a 60% win rate but his portfolio is down 6% using a 2/1 risk-reward.
✔️ Another trader has a 30% win rate but his portfolio is up 12% using a 1/5 risk-reward.
Expect to lose short term. Plan to win long term.
📌 So, it’s necessary to have very strict rules on risk management that help you to always preserve the capital and not to take crazy risks.
Risk management is very important, but what is more important is whether you can do it or not. Basic also needs to be emphasized to beginners in trading. Because there are still many who start trading without knowing how the risks they will face later, because for beginners who are still early trading, they usually only think about the benefits that will be obtained, without realizing the risk is much higher than that, if we don't know how how to manage it well.
In fact, this will traumatize beginners from the losses they will find when they jump right into the real trade and make them mentally exhausted. Their view of crypto trading will be bad, because all they get is a loss, unlike what they imagine, being a trader is difficult to do, if all we want and think about is profit. That is the wrong mindset, if from trading we will get profit continuously. Everything must have its own risks, it is not easy to be able to earn for beginners who are just getting into trading. It is necessary, prior understanding of the knowledge to trade and then you can try it.
You learn about risk management after you understand how to trade. That will really help you in trading later. Because from here almost everything will be taken into account and in the future what you have to do, what actions you have to take must all be determined before something like an increase or decrease in prices occurs. Risk management is also useful for you to anticipate large losses. For example, by placing a stop loss after you predict and consider how far the price will decline. Therefore, do not assume that the decline in prices is a natural thing, it could be that after the decline there will be no more increases. So you need to think carefully about this.
True, i guess most people understand about it already, that in trading you need to understand the risk and need to know how to manage it, when you need to stop before you lose even more, or when you can continue and gain profit. However, it's not as easy as it seems, even if you're good theoretically, it doesn't mean you can implement it just like that. I think experience is really needed in trading, since experience will be the best teacher to teach the lesson. However still, it's truly important to know and implement risk management so you won't regret trading.
I have a very good picture that clearly depicts what you mean here it is:
This signifies how crucial it is to save your capital. Trader must always choose a lost opportunity over lost capital because growing back capital is certainly impossible because it not only breaks your finance but also breaks you emotionally. You get self doubts and start to get tons of second thought about trading which eventually hurt your trading even more.
This signifies how crucial it is to save your capital. Trader must always choose a lost opportunity over lost capital because growing back capital is certainly impossible because it not only breaks your finance but also breaks you emotionally. You get self doubts and start to get tons of second thought about trading which eventually hurt your trading even more.
The reason why many people do lose their hard earn money is because of risk management when it's not used properly. Newbies are mostly decieved by high reward ratio without looking at the amount of risk they're taking. The power of risk management had really been helpful to my trading lifestyle.
I think, Risk management is they key to success. A trader must learn risk management how to trade.So,Risk management needs to control emotion. And you also need to know higher experience to trading then you can try it.
Wow thats an interesting topic. Also some motivational point for newbie. Most of the time lots of Newbie comes into trading platform by seeing sone expert traders profit proof. They just thought if i comes into trading then i can make daily 30-60% or more profit. No matter if i losse its a part others day if i generate again profit. Then i can recover what if the biggest misunderstand for traders. Remember why they called expert traders because they are that much able to recover their lose they know how to recover and how nuch time should i spend to recover. What we don't know we just start panik and loose everything. So i think trade management is also important.
I can't agree more. Everyone probably "knows" what they should do, but the reality is that even if you have the information for it, you may not end up doing it because of emotions, that is the biggest problem. I have seen way too many people make trades based on their emotions for the past few months.
-snip-
Trading with volatile emotions can lead to fatal problems. Losses will continue to loom over if emotions cannot be controlled. novice and professional traders alike have emotions. some of them are able to control their emotions because of the experience that has been quite a lot, but some people are still unable to control their emotions.-snip-
risk management, capital management will fall apart if emotions cannot be controlled.
Risk management is one of the important things that the trader should do as a habit, Doing risk management needs good control of emotion, especially in critical times like having a losing streak. Risk management could help you recover the losses but when emotion got messed up, The process that you executed will do nothing.
I can't agree more. Everyone probably "knows" what they should do, but the reality is that even if you have the information for it, you may not end up doing it because of emotions, that is the biggest problem. I have seen way too many people make trades based on their emotions for the past few months.
-snip-
Trading with volatile emotions can lead to fatal problems. Losses will continue to loom over if emotions cannot be controlled. novice and professional traders alike have emotions. some of them are able to control their emotions because of the experience that has been quite a lot, but some people are still unable to control their emotions.-snip-
risk management, capital management will fall apart if emotions cannot be controlled.
Beginners especially don't ever see anything that we see only around us, keep in a position where we can control in any case that's where I think it would be better than just the passions that are controlled.
something that to be neglected on because once you do forgot this thing up then you would really be hardly able to make out profits because you arent aware on how to deal up with the risk involved.
Emotion is one of the most common factor that will surely affect out every trades you do made and that would really be needing some sort of proper risk management handling.
I can't agree more. Everyone probably "knows" what they should do, but the reality is that even if you have the information for it, you may not end up doing it because of emotions, that is the biggest problem. I have seen way too many people make trades based on their emotions for the past few months.
-snip-
Trading with volatile emotions can lead to fatal problems. Losses will continue to loom over if emotions cannot be controlled. novice and professional traders alike have emotions. some of them are able to control their emotions because of the experience that has been quite a lot, but some people are still unable to control their emotions.-snip-
risk management, capital management will fall apart if emotions cannot be controlled.
Beginners especially don't ever see anything that we see only around us, keep in a position where we can control in any case that's where I think it would be better than just the passions that are controlled.
I can't agree more. Everyone probably "knows" what they should do, but the reality is that even if you have the information for it, you may not end up doing it because of emotions, that is the biggest problem. I have seen way too many people make trades based on their emotions for the past few months.
-snip-
Trading with volatile emotions can lead to fatal problems. Losses will continue to loom over if emotions cannot be controlled. novice and professional traders alike have emotions. some of them are able to control their emotions because of the experience that has been quite a lot, but some people are still unable to control their emotions.-snip-
risk management, capital management will fall apart if emotions cannot be controlled.
Any long-term investor in crypto should ensure that he retains the exposure at the most acceptable risk. The truth is that while risks are considered to be higher on the equity side, they are kept lower when you have a diversified portfolio. If the risk was high and the investor had less investments, he would have been fully exposed to market fluctuations.
Every sector is prone to its own set of risks. If one does not pay due attention to the risks that a particular sector is exposed to, the investor is risking his entire investment.
I can't agree more. Everyone probably "knows" what they should do, but the reality is that even if you have the information for it, you may not end up doing it because of emotions, that is the biggest problem. I have seen way too many people make trades based on their emotions for the past few months.Every sector is prone to its own set of risks. If one does not pay due attention to the risks that a particular sector is exposed to, the investor is risking his entire investment.
Weirdly and to be fair annoyingly they have made a lot of money, we are in a huge bull run right now (well not now but for the past few months) and I have seen people yolo their hot or btt or whatever coins on 100x leverage with all-in style and get millions of dollars from few thousand dollars. That's weird, I really did not expect anything like that to happen, many newbies became very rich thanks to this period by doing things we advised not to do but I guess market was so good that even people who didn't know how to properly trade ended up with money.
That is the reason, it is always recommended when you are not properly equipped with sufficient experiences not to go for high risk trades regardless of it will be your first year or second year of trading. Moreover your first six months of trading should be with demo money alone because, real trading environment but zero risk way will help you to learn all the tactics of crypto trading.
Along with risk management, a trader must learn tricks about avoiding emotional failure and effective money managements. Trading requires a lot of tactics and when a trader is failing at least either one of them will result in unexpected results.
First year is totally a huge mess to those traders who's starting up since the market is full of fud so for sure many traders struggle to handle their emotions in terms doing a good trade on certain unknown scenario. But in next year if you really make trading as a serious business and you keep learning everyday all is now easy in terms reading the chat and doing your own analysis on what will happen to the market in next 24 hours.
That is the reason, it is always recommended when you are not properly equipped with sufficient experiences not to go for high risk trades regardless of it will be your first year or second year of trading. Moreover your first six months of trading should be with demo money alone because, real trading environment but zero risk way will help you to learn all the tactics of crypto trading.Along with risk management, a trader must learn tricks about avoiding emotional failure and effective money managements. Trading requires a lot of tactics and when a trader is failing at least either one of them will result in unexpected results.
In general, I came to the conclusion, that your risk management is built correctly, when you can sleep peacefully at night and not think about deals and positions))
You mean if we are good at risk management then we can sleep peacefully? Or else, we always need to think about market fluctuations? Yes, you are right.Risk management is something that will ensure that we will not be losing all our capital even under occurrence of sudden market volatility. It will be possible when we are not greedy and when we are ready to accept losses rather than giving our emotions more priority. Traders must always work on effective risk management according to their trading habits; if they are not good at risk management then it is highly recommended to become investors rather than being non-profitable traders.
Risk management can be more appreciative when we are in hard times and we think deeply to find the solution for our losses and mishandled funds. We can see its vital role in our trading life as we are battling to win our emotions. If to find that we are not good at this, I'm not sure but possibly we are very near to losing ends. Yeah, we probably have a miserable life in trading.
Yeah. I couldn't agree more.
Any long-term investor in crypto should ensure that he retains the exposure at the most acceptable risk. The truth is that while risks are considered to be higher on the equity side, they are kept lower when you have a diversified portfolio. If the risk was high and the investor had less investments, he would have been fully exposed to market fluctuations.
Every sector is prone to its own set of risks. If one does not pay due attention to the risks that a particular sector is exposed to, the investor is risking his entire investment.
After 4 years of trading in the cryptocurrency market, I can definitely say that without competent risk management, you will not chew in the long term. In general, I came to the conclusion, that your risk management is built correctly, when you can sleep peacefully at night and not think about deals and positions))
I am pretty sure that the 1st year is going to be the crucial part because that is where you develop your risk management, also congratulations to you for reaching the point in trading where you can rest easy even though you are trading.First year is totally a huge mess to those traders who's starting up since the market is full of fud so for sure many traders struggle to handle their emotions in terms doing a good trade on certain unknown scenario. But in next year if you really make trading as a serious business and you keep learning everyday all is now easy in terms reading the chat and doing your own analysis on what will happen to the market in next 24 hours.
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