In the harsh and volatile market like CRYPTO, amidst the dancing emotions, numbers, and indicators that always shake your mind and discipline, only the method of Capital Management is the shield that protects you from Bankruptcy.
Capital management is a crucial factor for success in trading. Here are some effective principles and methods of capital management:
1. Set Stop-Loss and Take-Profit Orders: Always determine stop-loss and take-profit levels before entering a trade to protect your account from unwanted fluctuations. Stick to the plan you have set.
2. Avoid Overly High Expectations: Financial trading always carries risks, so set reasonable expectations and avoid being too greedy. Consistent, moderate profits over a long period will lead to compound interest, which is more significant than winning one big trade followed by a series of losses.
3. Trade with a Plan (Trading System): Always have a clear trading plan and adhere to it, improving it daily if you find flaws or mistakes. This helps you avoid emotional decisions and maintain discipline. A well-functioning trading system will bring you sustainable profits.
4. Use Leverage Wisely: Leverage can increase profits but also increases risks. Use leverage moderately and avoid overusing it. Refer to the leverage section below for more details.
5. Determine Risk Capital: Only use capital that you can afford to lose without affecting your daily life. This will help you trade with a completely relaxed mindset, free from any pressure, leading to clearer thinking.
6. Always Set Stop-Loss Orders: This is an important tool to limit losses and protect your account. Many people try to hold onto losses until their account is liquidated because they cannot accept losing money. This will lead them to the abyss faster than ever.
---Without a Capital Management Plan: Your capital will be recklessly managed, and when you look back, you will be surprised at how your assets have dwindled without knowing where you went wrong.
