MANAGING RISK IN THE CRYPTO MARKET

[Garden]

Investing in cryptocurrencies is always a risk. Therefore, it is better to invest available funds, preserving your well-being and the well-being of your family. That is, as they say in trading: you need to invest as much as you don’t mind losing and this loss will not be critical for your budget.

[vegasus]

Exactly, In my opinion, the ability to manage risks well and wisely in cryptocurrency is very important. Because with this, we understand what we should do in certain portions. because basically crypto is always risky. So we must be able to manage these risks for the purposes explained by the OP.

but sometimes, many people know about this but don't implement it. because some of them think that crypto can make a lot of money as long as they dare to take risks. But basically, managing risks doesn't mean that we don't dare to take risks, but rather means that we don't get caught in various market and project traps, so that we can know the risks so that we can predict the risks. And this is very necessary. Thinking about doing things in crypto with more control and good risk-management would be much better and useful.

[Agbe]

Any invest who does not know how to manage risk then he would lost in many areas in the business so risk management is one of the important aspect in the cryptocurrency market. Before you even invest in the market you have to take the preventive measures to avoid any loss. And risk management is not only in cryptocurrency but any business one involved

[bitterguy28]

This is our money that will be at risk ,this is our time that will be spent and this is our future that might be ruined if managing our funds wrongly,so why not apply risk management ,?
All you have said is an example of how people must be taking all the precautions just to keep their money safer and earning specially in this kind of market that going up and down regularly,
Knowing your position will keep you and your money at least having more chance of earning than losing aside from the fact that we need to keep hold because of the bullrun .
But thanks to your posts here there will be more precautions that may apply in the coming days.

[Gideon99]

The crypto market is a highly volatile and rapidly changing industry, making it a challenging investment environment for investors. However, with appropriate applied strategies, you can manage risks and protect your investments. Risk is an unavoidable factor in investing, especially in the crypto market. A successful investor is one who can balance risk and reward.

I. Why Risk Management is Necessary?
Because in financial markets in general, and the crypto market specifically, everything is probabilistic, and nothing can be certain 100%. Unexpected factors can always arise, which is why good risk management helps minimize losses. While other factors like knowledge, time, experience, and understanding are crucial, not knowing how to manage risk can potentially wipe out all your earnings in an instant.

II. Risk Management Strategies

1.Portfolio Diversification
a. Adjust Portfolio According to Risk Levels
Divide your investment portfolio into high-risk, medium-risk, and low-risk categories. Then, allocate appropriate proportions based on your individual investment style. A portfolio heavily weighted towards high-risk investments can be imbalanced. Profit often comes with risk, so balancing your portfolio and managing risk involves diversifying your crypto assets according to your investment style.

b. Allocate Capital Wisely
Because there's always a risk in investing, you need to allocate your capital wisely. The future is unpredictable, and you can't be certain that any of your investments will win 100%. Even with thorough analysis, unexpected events can happen. Therefore, planning how to allocate capital among different cryptocurrencies will make you feel more comfortable, as you've spread the risk across a range of assets.

c. Regularly Monitor Investment Progress
We can't always predict market changes accurately, leading to losses and portfolio burnouts. Therefore, you should monitor your assets to eliminate risks from misjudging market trends. Using cryptocurrency portfolio management apps helps investors stay on top of their accounts and make appropriate adjustments. Be responsible for the money you invest!

Some portfolio management tools:

CoinTracking: Offers various portfolio tracking features, including real-time balance updates and profit/loss tracking.
CryptoCompare: Provides portfolio tracking functionality, allowing you to view your portfolio's real-time value and historical performance data.

2.Avoid Letting Emotions Affect Your Trades
Personal emotions are the number one enemy of traders in financial markets. When a decision is based on emotional factors, it's not truly honest or objective. Here are some tips for controlling emotions while trading:

a. Maintain a Long-Term Perspective: Crypto markets can be highly volatile in the short term, so it's important to have a long-term view and not get caught up in short-term fluctuations.

b. Don't Chase Profits: Avoid the temptation to chase profits by investing in a cryptocurrency or project just because it's surging in value. Instead, stick to your investment thesis and focus on fundamental principles.

c. Don't Panic: If the value of your investment, don't panic and sell off your portfolio. Instead, take a step back, review your investment thesis, and determine if the investment still holds value.

d. Avoid FOMO (Fear of Missing Out): FOMO is a common emotion in the crypto market. Don't feel compelled to invest in a cryptocurrency or project just because others are doing so.

e. Avoid Overreacting: Avoid overreacting to news or market conditions. Instead, take the time to research and understand the situation before making any investment decisions.

f. Take Breaks: If you find yourself emotionally invested in your trades, take breaks and come back with a clear, rational mindset.

Avoid Overtrading
It's essential not to trade excessively, as overtrading can lead to poor investment decisions and excessive trading costs, sometimes without covering profits. Frequent trading can also lead to incorrect investment decisions due to emotions like fear, greed, and overconfidence. It's challenging to time the market, and if you're constantly trading, you may miss long-term profits while bearing short-term losses. Trading too often can indicate impatience, a critical quality in the cryptocurrency market, where short-term volatility is common.

Note: There will be unexpected events in life and in the crypto market, so be flexible in adjusting your plans. Only sell or adjust your long-term coin portfolio for the following reasons:

*When you need the money for essential living expenses.
*When you want to rebalance your investment portfolio by adjusting asset allocations to optimize profit and minimize risk.
*When you need funds for reinvesting in your portfolio, such as selling some BTC to allocate it to a more promising coin.

The number 2 That's an important point, emotions can often cloud our judgement when it comes to trading,that make us to take rash decisions and ignore the important ones. While trading, it's important to know the facts and data, Rather than your emotional thought.

[Garden]

You also need to understand that buying cryptocurrency is a long-term investment. Those who know how to wait make good money, and do not try to constantly be in the market and speculate on small time frames. That's why mistakes, heightened emotions and losses appear.

[Gideon99]

The crypto market is a highly volatile and rapidly changing industry, making it a challenging investment environment for investors. However, with appropriate applied strategies, you can manage risks and protect your investments. Risk is an unavoidable factor in investing, especially in the crypto market. A successful investor is one who can balance risk and reward.

I. Why Risk Management is Necessary?
Because in financial markets in general, and the crypto market specifically, everything is probabilistic, and nothing can be certain 100%. Unexpected factors can always arise, which is why good risk management helps minimize losses. While other factors like knowledge, time, experience, and understanding are crucial, not knowing how to manage risk can potentially wipe out all your earnings in an instant.

II. Risk Management Strategies

1.Portfolio Diversification
a. Adjust Portfolio According to Risk Levels
Divide your investment portfolio into high-risk, medium-risk, and low-risk categories. Then, allocate appropriate proportions based on your individual investment style. A portfolio heavily weighted towards high-risk investments can be imbalanced. Profit often comes with risk, so balancing your portfolio and managing risk involves diversifying your crypto assets according to your investment style.

b. Allocate Capital Wisely
Because there's always a risk in investing, you need to allocate your capital wisely. The future is unpredictable, and you can't be certain that any of your investments will win 100%. Even with thorough analysis, unexpected events can happen. Therefore, planning how to allocate capital among different cryptocurrencies will make you feel more comfortable, as you've spread the risk across a range of assets.

c. Regularly Monitor Investment Progress
We can't always predict market changes accurately, leading to losses and portfolio burnouts. Therefore, you should monitor your assets to eliminate risks from misjudging market trends. Using cryptocurrency portfolio management apps helps investors stay on top of their accounts and make appropriate adjustments. Be responsible for the money you invest!

Some portfolio management tools:

CoinTracking: Offers various portfolio tracking features, including real-time balance updates and profit/loss tracking.
CryptoCompare: Provides portfolio tracking functionality, allowing you to view your portfolio's real-time value and historical performance data.

2.Avoid Letting Emotions Affect Your Trades
Personal emotions are the number one enemy of traders in financial markets. When a decision is based on emotional factors, it's not truly honest or objective. Here are some tips for controlling emotions while trading:

a. Maintain a Long-Term Perspective: Crypto markets can be highly volatile in the short term, so it's important to have a long-term view and not get caught up in short-term fluctuations.

b. Don't Chase Profits: Avoid the temptation to chase profits by investing in a cryptocurrency or project just because it's surging in value. Instead, stick to your investment thesis and focus on fundamental principles.

c. Don't Panic: If the value of your investment, don't panic and sell off your portfolio. Instead, take a step back, review your investment thesis, and determine if the investment still holds value.

d. Avoid FOMO (Fear of Missing Out): FOMO is a common emotion in the crypto market. Don't feel compelled to invest in a cryptocurrency or project just because others are doing so.

e. Avoid Overreacting: Avoid overreacting to news or market conditions. Instead, take the time to research and understand the situation before making any investment decisions.

f. Take Breaks: If you find yourself emotionally invested in your trades, take breaks and come back with a clear, rational mindset.

Avoid Overtrading
It's essential not to trade excessively, as overtrading can lead to poor investment decisions and excessive trading costs, sometimes without covering profits. Frequent trading can also lead to incorrect investment decisions due to emotions like fear, greed, and overconfidence. It's challenging to time the market, and if you're constantly trading, you may miss long-term profits while bearing short-term losses. Trading too often can indicate impatience, a critical quality in the cryptocurrency market, where short-term volatility is common.

Note: There will be unexpected events in life and in the crypto market, so be flexible in adjusting your plans. Only sell or adjust your long-term coin portfolio for the following reasons:

*When you need the money for essential living expenses.
*When you want to rebalance your investment portfolio by adjusting asset allocations to optimize profit and minimize risk.
*When you need funds for reinvesting in your portfolio, such as selling some BTC to allocate it to a more promising coin.

There are many risk and factors to come in place. Managing risk in crypto market is not easy ,there are ways if one coin goes down in value, you will not lose all your money. The main thing is that you can do is to diversify your portfolio by investing in different crypto currencies. You should also remember to set a stop-loss order limit to your losses and take profit when market is good.

[Kemarit]

You also need to understand that buying cryptocurrency is a long-term investment. Those who know how to wait make good money, and do not try to constantly be in the market and speculate on small time frames. That's why mistakes, heightened emotions and losses appear.

You will not know it though if you haven't that experience. So for me, you have to go on certain phases here before you understand how the market works and take it in our favorite. You can't just go and invest from the beginner and says I want to be a long term. It's possible if you have a mentor or something that you will guide you.

But at least in my case, when I joined, I don't know what bull run is, and so I just sell whenever I make profits. And then looking back if I just hold on my precious Bitcoins, I could have make a huge profit just in 2017 alone. And with that in the next cycle I have a clear path on what to do and that is to become a Bitcoin holder.

[Garden]

You will not know it though if you haven't that experience. So for me, you have to go on certain phases here before you understand how the market works and take it in our favorite. You can't just go and invest from the beginner and says I want to be a long term. It's possible if you have a mentor or something that you will guide you.

But at least in my case, when I joined, I don't know what bull run is, and so I just sell whenever I make profits. And then looking back if I just hold on my precious Bitcoins, I could have make a huge profit just in 2017 alone. And with that in the next cycle I have a clear path on what to do and that is to become a Bitcoin holder.

Partial sales can be used. That is, when your analysis shows that the price can and does reverse, you can sell part of the coins, and the remaining part, after further growth, will bring greater profit. Although here you still need to look at when and at what price you bought bitcoins. And if it was a long time ago and at a very low price, then there will be less fear and anxiety to continue to keep this coin in purchases. But the big fear is often when a person bought a cryptocurrency at the maximum of its growth and it immediately begins to fall in price, then only one thought appears: how to sell it without losses, without thinking about profit.

[Doovla]

I can easily handle the risk of losing my entire fund. Bearing in mind the many hacker attacks and attempts by fraudsters, I make it easier for myself to choose for payments and payouts. Trading is almost reduced to a minimum of risk, as well as the transfer of money from one CEX exchange to another, as well as crypto currencies. You should try it, because such increases can hardly be repeated any time soon.