In most cases, even if a trader has a good strategy for earning, but does not take risks, he does not earn in the overall picture.
He can show large percentages on some transactions, but after playing too much, he eventually loses everything and is unlikely to show you a plus in his portfolio for the entire time of his trading.
Taking risks into account is a mandatory function in investing.
Each investor calculates the risks themselves. These can be daily risks, weekly risks, or risk per transaction if you are a trader and trade local or intraday price movements.
They can be monthly or annual if you invest globally.
Now I mainly trade cryptocurrency and these are the riskiest assets that exist, not only because of their volatility, but because of the scam of exchanges, coins and deception of investors in various ways.
So why is it so important to consider risks?
1. There is not a single trader in history who traded without losses. We all make mistakes, listen to other people, do incorrect analyses, etc. Taking into account the risks, we try and can track our mistakes in trading and trade better without losing much.
2. Many traders get carried away, they need to win back and in 90% of cases they do not win back, but lose everything. They do not have the strength to close the terminal, it is difficult, but considering the risks, every day you get used to small losses and you develop immunity to the courage, you get used to the losses that you sometimes incur.
3. Pre-planned risks save you time and nerves. Usually, if a deal is opened without risks, it is constant monitoring of the terminal and constant analysis if suddenly the price goes in the wrong direction - closing and opening positions, loss of money in commissions, panic. With pre-planned risks, you will clearly understand how much you can lose on a deal and earn, and you will not panic in the future. Every day you will analyze deals more and more clearly without analysis after entering a deal.
4. Many greatly overestimate the risks - from 5% of the deposit per transaction and then still fall through. You need to start with a small risk, for small amounts, to understand what mistakes you are making.
5. Even if you are 99% sure of your deal, never overestimate the risk - you are deceiving yourself and in the future the risk will fade into the background and you will lose everything!
6. And the last thing is to take into account the risks on cryptocurrency exchanges. I also take into account the risks of holding assets. I don’t hold much USDT on the exchange, remembering the FTX collapse, I just add positions with money from the card and upon closing the deal I immediately withdraw them back to the card without exceeding a certain percentage.
Risks are important for any trader/investor, whether you are a beginner or a professional, this is one of the most important disciplines in trading in my opinion.
Each transaction is an attempt to make money on an asset by investing your own money, remember this, if the transaction does not pay off your risks, maybe it is not needed?
Green briefcases to all!
#BTC #Risk_Management: #training #binance #Baluutrade
