Using high or low risk in trading?
A big hello friends of Steem Alliance, a great weekend to all. I would like to share a post related to risk management in trading, something that is simply vital to stay emotionally stable in the process.
We are deceived in social networks regarding trading .
Too many times in social networks we see gains that seem to be something that anyone at any time can achieve, but the reality, at least for me, has been very different, and based on this I will speak from my experience.
When we are retail traders or low capital, especially in our beginning of this path, we may believe that making 15 or 20% monthly is very easy, because in a way it is what they sell us on social networks, but the reality is that achieving that percentage annually is already a great success in trading.
I must say before continuing that I particularly know traders who make up to 30% monthly, they are very effective, but not only that, they already have an economic position that allows them to be mentally calm, because they know that if they lose it will not affect their economic life, so they allow themselves to risk more than what someone else would risk.
Now, how long can they maintain a losing streak and keep capital? there's the rub.
Capital size is very important in trading .
I also know traders who work with their own capital and can generate 3 to 4% per month, and for them this is fine. Even, I know a trader who is only looking for 2% monthly profit, no more, if he achieves it in the middle of the month or before, he simply does not trade anymore, and it is logical. He has 1.2 million dollars in his account, 2% of his capital is 24,000 dollars, he lives in a country where the minimum wage is 300 dollars, so an amount like that, 24,000, is a large sum.
But finally everything will depend on the level of risk you want to run and this in turn is related to the type of trader we are. In particular I think it is something we should know, and this will help us to place ourselves in a specific market, in a specific type of trading (scalping, daytrader, swing trader or investor). In particular I am a day trader, I make trades that last up to 2 hours, some can last an hour on average, but I am working on targeting longer duration trades, more like swing trading.
The latter because I feel that it has a great advantage on a psychological level, it gives greater peace of mind, since it does not force us to be every day in the market, but it also implies other things, such as learning about macroeconomics. For example, this week I was working with Oil, in the long term, I know that the war in the middle east can make it go up, therefore, I know that it could be a good way to keep open trades in buying in this very important commodity.
Our risk profile as a trader is important .
The detail is that those of us who make life in Steemit basically work with riptomonedas, and that's fine, it has logic. But we must be very aware that it is a highly volatile market, and that while it is true that in one day it can go up to 10% or more, it can also go down just as much, even after sbir a 10% we can see drops up to dce 20% in a matter of minutes. *This is something to keep in mind, because our risk when trading cryptocurrencies is much higher.
Another option we have with cryptocurrencies is to do Holding, and this is very beneficial for those who just want to wait, not to be in the market every day because they do not have much technical training or because they simply do not like it.
For example, those who have been holding their Steem or other cryptocurrencies for such a long period of low prices, could now be seeing their wallet go up, as the Steem has gone from 0.17 to just over 0.22 today.
Conclusion
Finally what I mean by this is that we must know ourselves to know what style of trading we adhere best and then create a strategy that is according to our way of being. It is also important that we consider the level of risk we want to take in the markets, because logically a bad decision (such as overleveraging, for example) can ruin our lives.
Big risks can generate big profits, indeed, but also big losses, is something we should never lose sight of, much less in a market as strong to operate as the crypto markets. I hope this information has been of benefit to you. Have a great weekend everyone.
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This is a very interesting post, it is also important that we take note of risk management, it will help us to far in this journey
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