# Risk Management 101 Managing risk is crucial to sustainable trading, especially in high-volatility markets. Effective risk management minimizes losses and helps you stay in the game longer. ## **Core Risk Management Techniques** ### **Stop-Loss Orders** Set stop-loss orders to automatically sell your token if its price drops below a certain level, limiting potential losses. ### **Position Sizing** Only risk a small percentage of your total trading capital per trade. A common rule is to risk no more than 1-2% on a single trade. ### **Diversification** Spread your investments across different tokens and sectors to reduce risk. Avoid “putting all your eggs in one basket.” ### **Taking Profits** Scale out by taking partial profits as prices rise. This way, you protect some gains and lower your risk while allowing the rest of your position to run. ### **Avoid FOMO (Fear of Missing Out)** Resist the urge to jump into trades because of hype. Stick to your strategy and avoid emotional decisions. ### **Keep Emotions in Check** Emotional trading often leads to poor decisions. Use a clear plan and follow your strategy consistently. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.bitfoot.com/trading-guides/getting-started/risk-management-101.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.