5 Ways To Manage Money And Risk While Trading Cryptocurrency

Cryptocurrency trading can be highly profitable if the risk is appropriately managed. However, if it isn’t done correctly, a trader can lose a lot of money. Even though crypto trading can be very effective because of the considerable leverage accessible, the losses can be comparably huge as well, if not more, than the initial investment. To be effective in crypto trading, you should have a sound risk and money management strategy to keep yourself safe from potential losses.

Invest What You Can Afford To Lose

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You should never forget one golden financial rule: never invest money you can’t afford to lose. One of the most common characteristics of crypto futures is volatility. It’s pretty easy to lose money in a very volatile market. Prices are subject to change at any time. You’ll find yourself in a bind if you wager more than you’re willing to lose. To decouple emotions from your trading decisions, you should only trade crypto futures with excess savings.

A skilled trader must be able to control their emotions and act in a methodical and measured manner. In addition, make sure you have a substantial risk and money management strategy in place to secure your money at all times. According to the rule of thumb, always risk 1-2 percent of your account balance per trade. Importantly, expect to lose money while trading futures and embrace it as part of the process. You can use these risk and money management strategies to earn profits when trading cryptocurrency. Click on this go URL, and start trading in cryptocurrency right away.

Don’t Go Overboard With Your Trading

Anyone interested in trading futures, whether as an investor or a trader, must exercise caution to avoid overtrading. When you have too many open positions or risk a disproportionate amount of capital on a single deal, you’re overtrading and putting your entire portfolio at risk. To avoid overtrading, stick to your trading plan and be disciplined in sticking to your pre-determined approach. Most rookie traders are renowned for overtrading, which is usually due to the inability to regulate emotions like greed, fear, and enthusiasm.

Keep An Eye Out For The Counterparty Risk

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The cryptocurrency market has seen a significant increase in value. However, crypto exchanges and challenges pose a counterparty risk as users cannot reverse Bitcoin transactions. Furthermore, you cannot entrust your keys to a crypto exchange. It is because several cryptocurrency exchanges have been hacked previously, resulting in the loss of funds.

As a result, unless you’re regularly trading, don’t keep your Bitcoin in a crypto exchange. Diversify your Bitcoins over multiple crypto exchanges. It will also help if you invest roughly 20-30% of your total capital in Bitcoin. Also, please do some research on a Bitcoin exchange before signing up with it.

Create And Stick To Your Trading Strategy

When building a trading plan, you must include a complete description of your exit position, including entry and exit indications, position-sizing, and stop-loss placements. The benefits of having a trading strategy are vast, ranging from reduced stress throughout your trading day to missing fewer trades and exercising more awareness, all of which allow you to take highly targeted approach trading seriously. It is a fundamental technique. When all hell breaks loose, and individuals start facing issues in a few transactions, a majority of rookie traders will put their plans in the trash bin.

The panic that comes with making bad deals is followed by a series of vengeance trades in which a trader attempts to reclaim what he has lost by a series of uncoordinated transactions. As a result, there are frequently more losses. As a result, it’s critical to stick to your strategy. It is recommended that you write out your plan and stick to it. You need to stick to the note no matter what, and altering it is not an option. Clear departure points should be included in your written note.

If you lose, do not change your stop-loss position in the hopes of recovering unless your plan allows it. Second, in the event of a favorable decision, you should highlight all the levels at which you intend to establish new contacts, as well as the volume desired. It is the most challenging money management approach for all traders. Panic sets in when everything becomes crimson. Many people can’t take the prospect of losing money and succumb to peer pressure. Nothing will be able to stop you from making a kill if you perfect this method and combine it with the other two.

Never Invest More Than 5% Of Your Capital

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Money management is a strategy for reducing risk while increasing a trading account’s growth potential. It’s a method of limiting the amount of money invested in a single trade to no more than 5% of the total account value. Although the cash value of that 5% fluctuates with the account value, the 5% restriction assures that you do not overexpose your entire account to one position.

When investing in high-leverage derivatives like crypto futures, you can lose your whole investment capital in minutes due to the unpredictability and volatility of cryptocurrencies. As a result, investors should adhere to a stricter limit. When trading volatile assets, the rule of thumb is to risk just 1-2 percent of your capital in a single trade.

Having the correct position sizes, knowing how to set and move your stop losses, and considering the risk/return ratio are all essential aspects of risk management. You may construct a portfolio that you won’t lose sleep over if you have a solid money management strategy in place.


Trading can be an incredibly successful option, especially because of the enormous leverage it offers. However, without a thorough understanding of how it works and how to mitigate associated risks, one can risk losing all their money. If you want to make a lot of money, crypto futures are a terrific way to go. Trading in cryptocurrency requires good money and risk management to maximize returns and minimize losses.