3 Ways to Manage Risk in Crypto Trading
Crypto trading can often seem risky for a lot of traders new to the space. Here are 3 simple rules every trader needs to bear in mind to manage risk in crypto trading!
Split Your Positions
When traders are looking to make profit at a higher price in the future. They can split the positions by setting up different price target in the uptrend. This strategy allows traders to have a chance to hitting different price target on each higher step, thus increase the likelihood of profiting at a higher price. However, if the price moves into downtrend direction. You can still make profit because you have set the price target at the lower security point earlier.
Use Stop Loss
Stop loss allow traders to set up orders to close positions automatically once a certain price level has been reached. It allowed traders to manage their risk by limiting the loss from a single trade. With stop loss, traders can ensure their overall strategy are moving into the profitable direction.
Aware of Your Risk to Reward Ratio
The risk to reward ratio is composed of three parts: entry level, exit target and stop loss. The ratio shows how much return traders can expect from a specific trade compared to the risk involved. Typically, the lower the ratio, the higher the risk the trade is exposed to.
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