Risk management in cryptocurrency and forex

[allison001]

Most of the people I know now, checking their smartphone or laptop you'll find out that most of them are into trading cryptocurrency and forex.
This is a very good means of making money online but at the same time this method of making money online is very risky, that is why it is always advisable to invest or trade what you can afford to lose, because when you lose, you have no one to blame but yourself.
How can we manage risk when it comes to crypto currency and also trading?

Succeeding in trading forex is not really based on each person's strategy but philosophy. A lot of crypto and forex traders lose their funds overnight, because they want to become millionaire overnight.

I have one of my friend that's into this,he gets some profit each trade he enters being it crypto or forex because he's really good in both analysis.Getting profit,he doesn't want to quit for the day, he's always looking or hungry for more,in this way he end up losing more of his money in the market.

He also buys cryptocurrency on binance,when the coin pumps giving him little profit,he refuse to sell it out,but hungry for me.

We should try and control.

 

[Suba]

Crypto and forex are full of risk but also promise high profits, but most of the traders have a greedy nature, continue to trade throughout the day so that even though they initially make profits, they are lost in a few trading transactions. so it is necessary to apply risk management to trades such as not determining stop loss and take profit points as well as most traders not calculating risk/reward ratios etc. Whereas in crypto investments, as you said, many investors miss the opportunity to take profit so the price turns down.

 

[Jasz]

In the financial world, risk management is a key component to success. This concept is especially pertinent in cryptocurrency and forex trading.

In order to achieve a good understanding of risk management, it’s important to first understand what risk management entails. In the financial world, risk management involves structuring activities in such a way as to reduce or eliminate and unforeseen circumstances or outcomes. In other words, it’s part of a strategy that aims to reduce negative outcomes while simultaneously working to increase positive outcomes.

Risk management techniques can vary based on the asset class being considered and the nature of the exposure that the investor has with regard to that asset class. Risk management techniques are used to identify risks and then determine how to best manage them through methods like hedging, diversification, and more.

It’s important for investors who work with cryptocurrency or forex to understand risk management in order to ensure their continued success. Using proper risk management techniques can help protect investors from potential losses and help them realize profits instead. Learning about risk management is an important step for any investor, regardless of experience level.

 

[Cryptoworks]

Risk management is very imprtant in every aspect where your money is involved.

 

[Mika]

I cannot speak of forex because that is not my forte, in fact, I have never tried my hands on forex. Well, I did try my hands with forex on a demo account, I was given 10K USD to trade forex and I did manage to earn profits from demo trading. However, I was not encouraged to try with real money. However, I have in to cryptocurrency investment and trading. Just like forex, crypto is also a risky business but with crypto there are many ways to manage the risk. For instance, if you invest in top coins according to coin market cap, for instance Bitcoin (1st), Ethereum (2nd), BNB (4th) it is very unlikely that you will lose your investment. Well, you assets might be devalued but if you hold your assets until the market improves, you can profit. Trading crypto can be risky, but if you made some losses in one trading, you might be able to recover the loss in another trading. You cana also use your crupto assets for staking, yield farming, etc. to generate profits or minimize your risk. I hve not tried this, but when the market starts going down, you can convert to stable coin to minimize the risk.

 

[Good-Guy]

Indeed, both forex and cryptocurrency markets are kind of risky markets, but you can definitely try to minimise the risks associated with investing money into these kinds of markets. Here are a few things that you can do in order to reduce risk when it comes to trading in cryptocurrencies:-

1) Read News

Reading news can save you because you need to be aware about what is happening in the world of cryptocurrencies. Whenever you hear a bad news, the chances are that the market will collapse after that news gets spread. I remember being saved from losses twice just because I used to read cryptocurrency news

2) Invest What You can Afford To Lose

It is never a great idea to invest your life savings rather you must diversify your funds and use your funds in a wise manner. You must only invest the amount which you can afford to lose because cryptocurrency markets and forex markets are very risky.

3) Create A Trading Strategy

Many people just jump into the cryptocurrency markets without making a proper strategy and this is a really common mistake many people make. many people believe that they will buy coins and they will sell it and it is that easy, but in reality things do not work that way at all. You need to create a great trading strategy.

 

[Shaf]

My favorite resource to learn cryptocurrency trading is by Emperorbtc and this is one thing he emphasises on especially for beginners. It's because this is key to whether you will survive in trading or get rekt.

Everyone has their own risk management strategy which should tally with the trading strategy used. A scalper would have different rules to follow that someone who's trading long term, but some things are common to all.

One thing that really stands out for me is understanding that emotions are important in risk management. When you can control your fear and greed for more, you can make decisions rationally, enter trades and exit at set targets without out a lot of losses. Most traders lose out on winning trades or enter wrong trades and a simple way to.learn this is to practice frequently in small time frames. The more you lose, the more you learn what your mistakes are and you learn control.

 

[maidnagi]

Always have an exit strategy. Determine resistance and support levels on the charts to plan your trades ahead of time. Calculate risk to reward ratio and set take profit and stop loss levels. Also, never use excessive leverage because even a 1% move against you can blow your account.

 

[minenovo]

I think a good way to lower one's risk is to create a comprehensive trading plan and be disciplined enough to follow that trading plan to a T, no matter what your emotions tell you to do.

 

[sincerem]

Forex trading and cryptocurrency trading are risky. I am not a forex trader, I am focused on cryptocurrency, I don't want to have dual interest in both, because I don't have much funds to go with two of them. Even with crypto I still don't have much funds to trade it, I don't trade Futures as a day trader, because I don't have up to $1,000 to risk. I am still working my way through to earn more money to invest further in crypto and also applying risk management skill. When we are trading, we shouldn't just trade without limit, we should have limit, and when the limit is reached for either profit or loss we should just back off from trading that day. The reason for the stop loss is to regulate the profit margin and loss margin too, when it goes against it wouldn't exceed what you wouldn't want to lose. So, when it goes as planned too, we take profit for a single trade, we should also apply that to my trade overall, set how much we want to earn, and it should be based on knowledge and capital. Those who uses small capital blow up their trading account due to greed of going for higher percentage.