Risk management in investing is very important because it involves identifying, analyzing and managing the risks associated with investment decisions. The main objective of risk management is to protect capital, minimize losses, and increase the chances of long-term investment success.
In the investment context, risk refers to the possibility of loss or an unwanted change in the value of an investment. Every investment has inherent risks related to factors such as market fluctuations, economic changes, government regulations or unforeseen events. By understanding and managing these risks, investors can reduce their negative impact and increase the chances of investment success.
And indeed risk management is useful for detecting probability of predictions of fluctuations and security of financial flow, so that it has a fairly mature consideration and honestly risk management is a form of anticipatory attitude in the situation where we understand how much loss will be obtained if it is not in accordance with the calculation. And that is very important in the mentality of trade, so we have a limit to something that we cannot lose.
I think it is more to the learning step about news sentiments before deciding risk taking, it also needs to be considered and calculate the possibility of making investment decisions, the factors that affect market prices besides technical calculations need to be read and pay attention to decide the risk taker at trading that we will do.
When trading there are rules to observe in other to protect your margin, it's more like if you can't make more money, don't lose the one you have,
That's where risk management comes in handy.
The strategies are;
_ Don't risk too much money, start with what you can afford to risk. Focus on the risk not rewards.
_ Identify potential risk as;if it goes down, if you don't take profit, if you don't use stop loss and if the coin goes against your analysis.
_ Reacting to risk, use stop loss and always take profit.
There are pros and cons to stop loss in scripto trading. For example, when you trade a coin at a certain price, you can place a stop loss at a certain price to avoid the risk of losing your entire money. When it falls too much and when the market reaches your fixed price, your trade will automatically be canceled. The problem here is that the money you lose is not recoverable, but if you don't use stop loss, even if the coin's price drops too much. There is a possibility of profit again.
I think it depends on what coins you buy, if the coin you buy has a probability to turn the situation in the next time, the stop loss decision you don't need to take at the time of decline, but if you find a coin that has no power, maintaining it is also an action Stupid and you can lose all the money, which you actually stop it before.