Risk Management And Trade Criteria....#002

source

Welcome once again to my blog as I continue on this very important topic of risk management and trade criteria.

When we talk about risk management in trading some really do not understand it or what that entails and different people have different ideas of what proper risk is.

Some understand risk management but funny enough they don't apply it especially when it matters and not knowing that risk management is an integral trade criteria is the beginning of failure.

Last time I actually talk about what risk management is and went further to touch down on its importance thereof and today I will like to finish up on its importance because risk management is very necessary for success in the crypto market as especially crypto trading whether on spots or futures.

Let's dive right into it;

---

---

Importance Of Risk Management In Trading

---

---

Other healthful importance of risk management is in trading is rightly being outlined carefully below and hopefully at the end we will come to see that indeed risk management can't and shouldn't be taken for granted especially considering the volatile nature of the market.

1) Optimized Position Sizing: When we practice good risk management in trading especially proper one then it will help us to determine the right margin or position size to use for each trade.

As we shouldn't use high position size when we know we are trading with a small account, when we practice proper risk management it will help us to know not to over-leverage so we shouldn't loss all our capital in only one trade which will be highly detrimental to us.

As a trader we need to have risk tolerance and for each trade there must be a potential risk hence will should ensure will trade in a way no one trade should have a permanent damage in our account by using proper or optimized position seizing.

2) Adaptability to Market Changes: When we have proper risk management plan it will also help us greatly when market conditions change.

When market conditions changes a trader who applies proper risk management knows to adjust his strategy and exposure to the market accordingly.

This things may not be taught in school as we have to develop our emotion to be properly disciplined as it start from who we are first as individuals.

If we are not disciplined and go out there we are exposing ourselves to the market and it will show no mercy.

3) Improvement of Decision-making:Proper risk management also help us in knowing to go back and re check our past trades and learn from our mistake which this helps us make good decisions next time we are faced with such delima.

When we talk about risk management I'm trading it doesn't really mean completely eradicating risk, not at all as it's impossible to do that instead it deals with something much more.

Risk management deals with being able to manage and control risks associated with trading in a way that our chances of long-term profitability will be guaranteed.

---

---

Conclusion

---

---

Indeed I have but one final thing to say, anyone who want to venture into trading must be a risk manager first and foremost for a better chance of sustainable success unless he doesn't want to be here for long.