Post
Topic
Board Trading Discussion
Re: Why risk management is so important for Every Trader.
by
Dump3er
on 28/04/2021, 19:37:43 UTC
Today Market Suddenly dump, so I explain why need risk management is so important for Every Trader.

📌 If you enter a $100 trade and lose 15%, you’re down to $85.

📌 If you make 15% profit on your next trade, now you have $97.75

📌 It's harder to recover losses than to preserve funds. Don't think how much you can make on a trade. Think of how much you can lose on a trade. Risk-Reward ratio is key.

🎯 Also win % does not make a successful trader, but strategy and risk management do.

For example:

✖️ One trader has a 60% win rate but his portfolio is down 6% using a 2/1 risk-reward.

✔️ Another trader has a 30% win rate but his portfolio is up 12% using a 1/5 risk-reward.

Expect to lose short term. Plan to win long term.

📌 So, it’s necessary to have very strict rules on risk management that help you to always preserve the capital and not to take crazy risks.

I like the point about the relative percentages the most. It is tough if you are down 50% with your investment as you need a 100% gain to get back from where you were coming from. That makes it so dangerous to buy into coins that feel like they are overpriced. If they crash hard you obviously have a problem.