Best Risk Management Strategies for Crypto Trading

Share IT

Trading by its very nature is a high risk. Especially the crypto market can be very volatile. Signals provided are done through careful analysis; however, a quick way to lose money is to have no or poor risk management.

So what is risk management? Risk management is how you protect yourself and your portfolio from heavy losses and essentially losing all of your money. It is a crucial part of trading and is often underestimated.

Risk Management Strategies

Risk Management Strategies

Plan your trades

One of the most significant battles for a trader is the fear of missing out and jumping into a trade expecting it to keep going up (or down) only to find that it is at the top and reverses. Planning your trades takes the emotional element out of the trade and forces analysis to occur, which is essential.

Don'T Panic Sell
Don’t Panic Sell

Always set a stop loss

No one likes losing money, and being in a trade that goes negative can be challenging, but it is always better to lose a little, so you can live to trade another day than stay in a losing trade hoping for it to reverse, only for it to keep dropping. But, of course, being in a profitable trade doesn’t make setting a stop loss any less important! Moving your stop loss to entry is just as essential to protecting your portfolio and preserving your profit!

Don’t forget to take profit

We all want to buy the absolute bottom and sell at the absolute top, but that is rare and hard. As much as we can plan, we can analyse, the market has a mind of its own, and sometimes things don’t go the way we expect. However, when you are in profit, taking profit regularly is integral to how you manage risk. So instead of waiting for the absolute top, take profit regularly so if things reverse, you already realised profit, and with stop loss moved to entry, your trade can become risk-free.

Always Take Profit
Always take Profit

Also Read: What is Risk/ Reward and Money Management?

The 1% rule

Often, unsuccessful traders have a far too big position and represent a large portion of their portfolio. This increases the risk, so when the trade doesn’t work out, the amount of loss is a substantial portion of your portfolio, and then you have less to trade with after. It is far better to trade with a tiny portion of your portfolio. If things go wrong, you have limited the amount you can lose, and therefore, it is not detrimental to your overall portfolio. Trading is not a get rich scheme! A successful trader builds and increases their portfolio over time and many successful trades.

Following signals

Our signals have done all of the hard work for you! Careful analysis has taken place, and all entries, profit levels, and stop-loss have been set. The amount of leverage and the entry points have all been carefully thought through. Can you change the entry or increase the leverage or use a more significant position than is recommended? Of course, you can, but the amount of risk you will be carrying will be far far too high, and while you may be successful in the short term, you are far more likely to lose money that you cannot afford to lose and end up in a position where you are unable to trade. Our goal is for you to increase your portfolio and become a successful trader for the long term.

Follow Our Crypto Signals
Follow Our Crypto Signals


There are pros and cons to isolated and cross margin, but as a rule, we recommend isolated margin. Isolated margin limits the risk to your position and no more. Cross margin means you can go above 100% negative, but your portfolio is exposed to the risk. While that doesn’t seem that there are positives for using gross margin, there are. Still, it is not recommended to be used by anyone who is not an experienced and seasoned trader and by default, we recommend (and post signals using) isolated margin.

Risk/ Reward ratio

The risk/reward ratio marks the prospective reward a trader can earn for every dollar they risk on an investment. Consider the following example: an investment with a risk-reward ratio of 1:3 suggests that an investor is willing to risk $1 for the prospect of earning $3. This ensures that the potential losses are minimised. It also means that your portfolio still increases even if you have one successful trade and one unsuccessful trade (You have $3 profit from one trade and $1 loss from the other, leaving you a net $2).

Best Risk Management Strategies For Crypto Trading
Keep up with Risk/ Reward

Accept your losses

Every trader experiences losses, and while no one likes or wants them, they are to be expected. However, the losses must be minimised, and the ratio of winning trades to losses favours the wins.

Best Risk Management Strategies For Crypto Trading
Don’t Take the Loss Personally

Cornix and Trade Automation

Cornix and trade automation software helps open trades when you are asleep or busy with life; it also ensures you follow the signals asset. It also allows you to not worry about your transactions. With every trade, you should be okay that it may hit stop loss. It’s not healthy to agonise over every candle and every price increase or decrease. If you don’t know how to use the Cornix bot, watch the video below:

Also Read:

Share IT
Prabhat Tiwari
Prabhat Tiwari

I am someone who loves swimming in the ocean of DeFi and believes the disruptive technology, i.e., Bitcoin will change a lot of things and not just our financial system.

Get Daily Updates

Crypto News, NFTs and Market Updates

Can’t find what you’re looking for? Type below and hit enter!