The field of digital currencies is an integral part of risk management and one of the most important elements of trading in the digital currency market. How many traders have lost their money due to mismanagement of capital, and how many successful deals have failed due to mismanagement? You must determine the percentage of money that you will enter from your portfolio into trading, the free margin that you keep in your portfolio in the form of USDT or any other stable currency, then the percentage of capital that you enter into each deal separately, then the percentage of money that you enter into short-term and medium-term storage deals and sometimes long-term storage deals, quick scalping deals and daily deals.
🟠 Now here are the most important things you should know, adhere to and apply in your trading:
🔸️First: You must know that there are types of trading methods, and it is preferable to trade spot and stay away from futures and margin trading, whether the leverage is large or small, because it will expose you to huge losses.
🔸️ Second: There are four types of trading: spot trading, daily trading, and trading for medium or long-term storage.
🔸️Instant trading: We mean what is called scalping. You enter several deals in one day with a large capital and seize only a few points and exit the deal after only a few minutes. This type of trading is nerve-wracking and puts a lot of psychological pressure on the trader. It is not recommended except during strong news.
🔸️Day trading: This means opening a deal for a short-term target that may be closed after hours and may take a week or two in some cases.
🔸️Medium-term storage: We mean buying the currency and keeping it for about three months after following its news and studying its agenda.
🔸️Long-term storage: This is for a period exceeding six months to a year only, in my opinion, because if the currency has a project, its price will rise by a factor of two for less than a year, except rarely.
🟠 General instructions:
🔸️You should not risk more than you can afford to lose, as it is not reasonable to trade and circulate in the digital currency market, which is known for its major collapses and fluctuations that destroy large amounts of capital.
🔸️Always keep a portion of your funds in the wallet frozen in stable currencies such as USDT, first to seize sudden opportunities and second to support your trades in the event of a market decline and a major correction of the third degree on the Fibonacci scale.
🔸️When we say the first, second and third target, you must place the stop loss at the first target and then move it to the second target when it is achieved, and so on, because the currency may decline and the targets may become losses.
🔸️Don't put all your eggs in one basket. This issue is one of the most important points of risk management. What is meant here are two things: The first is investing in more than one digital currency, but the choice here must be thoughtful and not entering into any currency that appears promising, and its team promises that it will achieve successive successes in the financial world and other shiny promises that fail to face reality in many cases, especially if it does not have a project on the ground. If you are an investor in one currency, it may collapse and all your money will go down the drain, as happened this year 2021. The United States of America filed a lawsuit against the Ripple currency XRP, which was strongly expected to rise above five dollars, but the lawsuit and investors' fears made it stop at half a dollar, so you should diversify the electronic currencies in which you invest.
🔸️The second reason for not putting all your eggs in one basket is that what we said about currencies and that they may collapse, we say about platforms, as they may also collapse due to hacking or disagreement between their managers at any moment. Perhaps everyone knows that in 2019, a disagreement occurred between the managers of the Cryptopia platform, and one of them entered the platform and randomly changed the symbols and codes, which caused the loss of most of the customers’ currencies on the platform. Then the Cryptopia platform entered the stage of judicial liquidation, and customers and investors lost more than a billion dollars.
🔸️Do not enter against the current, no matter how tempting it is. If the price is in a descending channel, it is not reasonable to enter by buying. We look at the price channel with today's chart and then four hours. Taking into account the correction operations.
🔸️Never enter into a currency, no matter how good it is and expected to rise, with a large amount from your portfolio. Always enter with 10% of your capital in each deal, and in the best circumstances 20% of your capital. As for long-term storage deals, it is preferable to enter with less than 5%, and medium-term deals less than 10%, provided that you allocate 25% of your capital for medium-term storage and 10% of your capital for long-term storage.
🔸️Do not enter into deals in random currencies or trade on bad platforms. Perhaps your financial management is correct and your analysis of the currency is good, but the failure of the currency due to the lack of any project for it or the lack of sufficient volume will lead to you losing as a result of the death of the currency and its deletion from trading platforms.
🔸️You must set reasonable goals for each deal and exit at each goal with a certain percentage of your capital, and constantly track the profit to maintain your profits.
🔸️Don't be greedy, sometimes you achieve a profit rate of up to 20% and you say that the currency is still rising, but the opposite happens and the loss becomes 20%, so you have to be satisfied.
🔸️Commit to your plan and strategy: Committing to the plan also enables you to avoid entering the psychological spiral that afflicts traders who have lost and are trying to recover what they lost through ill-considered deals, which often lead to more losses.
🔸️The greater the risks, the greater the gains, so it is possible to enter into new currencies with limited capital after studying the currency project - to achieve large profits with a small capital that exceeds the double by ten times or more.
🔸️Avoid excessive trading. Excessive trading and entering into several daily deals, whether scalping or otherwise, is definitely the biggest mistake you can make on your way to becoming a professional cryptocurrency trader.
🔸️Prepare for the worst, as past performance is not an indicator of your future results. Your current success may turn into losses, so be prepared for high market fluctuations. We cannot know the future of digital currencies, but the major collapses that have occurred in previous years make us expect the worst.
