What is #Risk_Management: risk management in trading? It means limiting losses to 10% of your current Profit and Loss (PNL)
Let's illustrate with an example:
Imagine someone named Satoshi Nakamoto
who just passed their KYC on #Binance and wants to start trading Bitcoin after hearing from their Uber driver that Bitcoin is the future of finance 😉
With a $10 budget, adhering to the 10% rule
it means Satoshi can trade freely, with as much Leverage they want but can only lose $1 at the most per any given day.
Satoshi saw ChronicleCrypto's successful trading signals on Binance Square 🤣🤣🤣
and then Satoshi executes a very successful trade, doubling their initial $1 investment by 100% to a whopping $2 (wen Lambo 🤔)
Now, considering their current PNL of $11 ($10 initial budget + $1 profit), Satoshi's maximum allowable loss now suddenly becomes $1.10 for their next trade (within the next 24 hours)
So as Satoshi's PNL grows with each successful trade their bet size grows always
sticking with the 10% rule per 24hrs
This process repeats, emphasizing discipline and adherence to the 10% rule for sustained success in trading, irrespective of leverage or stop losses or knowledge in trading
Risk management will keep you in the game
longer and stronger and will help you avoid
emotions and help you recover from a loss and help keep your confidence levels up as you gain more and more momentum and experience with each and every trade that you take.
hope this helps guys!
See you at the top 👊
