Loss management

1. Set a maximum loss limit:

Determine in advance what percentage of your capital you can afford to lose daily or weekly.

If you exceed this percentage, immediately stop trading and re-evaluate your strategy.

2. Learn from mistakes:

Review your losing trades to determine the reasons (poor timing, not using stop loss orders, unexpected market movements).

Avoid repeating the same mistakes in the future.

3. Do not chase losses:

Do not try to quickly recoup losses by entering into random trades or taking excessive risks.

Wait until you find a well-thought-out trading opportunity based on logical analysis.

4. Use an emergency plan:

Keep a portion of your capital outside of trading platforms to ensure business continuity if you suffer significant losses.

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When should bankruptcy be declared?

Declaring bankruptcy in trading does not only mean losing money, but also indicates the need to temporarily or permanently stop trading if clear indicators appear, such as:

1. Depletion of basic capital:

If you lose all your trading capital and no longer have the resources to refinance without affecting your living needs.

2. Recurring losses despite adjustments:

If you are constantly losing even after adjusting your strategies and learning new methods.

3. Negative psychological impact:

If losses are affecting your mental health and causing ongoing stress.

4. Inability to cover financial obligations:

If you start using money that is intended for other purposes such as bills, loans or essential expenses.

5. Loss of confidence in the market or strategy:

If you no longer see real opportunities for profit due to market changes or because you are not effective in analysis and planning.

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Conclusion

Managing profits and losses in cryptocurrency trading is a matter of discipline and well-thought-out strategy. Successful trading is not just about making profits, but also about preserving capital and minimizing losses. If you reach a point where your losses threaten your financial stability, donโ€™t hesitate to pause and reevaluate. Successful trading is based on patience, continuous learning, and maintaining a balance between ambition and realism.