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.