[Risk Management] - Crypto Academy / S5W7- Homework Post for @ reminiscence01

in SteemitCryptoAcademy6 months ago (edited)
Greetings everyone
Today I would like to present my homework task for prof @reminiscence01, The lesson was easy got to comprehend so without wasting much time I will be starting my work immediately.

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1. What do you understand by "Risk Management"? What is the importance of risk management in Crypto Trading?


Each time we talk about what we call risk management it is usually known to be the most essential section which traders make looking at any time on the market whenever they want to start their trading. Some new and amateur traders are always having thought that each time they try to add two or indicators to their chart analysis they can easily get an accurate outcome and prevent all the risks on market, Since it is a chart trading market every time things will be changing, So utilizing more than one indicators is not always going to stop prevent traders losing an asset that is not 100% accurate. So when we talk about risk management it goes we what I just talked about, Every trader including professionals must also be very careful on the market because they can also, fall victim, So risk management is one of the best and greatest techniques used by most traders on market in other to help them from reducing a higher casualty in their trading market but rather makes enough profit in their trading market, When it comes to the risk management all users are having various techniques they utilized to help them reduces their casualty in the trading market and but rather makes enough profit. This tells us a lot about risk management and it very essential to traders since it reduces the chances of most traders especially newbies from creating errors for themself when they want to make trading on the market. With risk management, it has provided some regulations to all traders on the market to makes prevent casualty whenever their trades do not go in their own choice or path this will make them safe due to the help of risk management.



Importance of Risk Management



  • Due to the help of the management, it is playing a vital role when it comes to trading, Because the risk management it is helping all traders on market to build up their courage when they want to trade, So each time traders on market try to meet all the regulations correlating to risk management and also making good use of risk management they build an extremely courage on their trading market, That is it clears all their thoughts about losing their profits.
  • Due to the help of the management, it is playing a vital role when it comes to trading, Because risk management it is helping all traders on market to be making the best decision for themselves, And in trading whenever traders make their decisions and when it goes in their liking they make enough profit for themself and prevent all loose.
  • Due to the help of the management, it is playing a vital role when it comes to trading, Because risk management it is helping all traders on market, Because with the help of the risk management always provides traders in a market the best time to make their trading and also the best time to quiet their trading.
  • Due to the help of the management, it is playing a vital role when it comes to trading, Because the risk management is helping all traders on market is helping traders on market, With the help of the risk management it makes traders on market be reducing all their casualty on market each time their analysis does not go as planned, This is going to make traders lose very fewer of funds because of the utilization of the risk management.

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Explain the following Risk Management tools and give an illustrative example of each of them. a) 1% Rule. b) Risk-reward ratio. c) Stop-loss and take profit.


1%


So with the 1%, is playing a major role to traders when it comes to their trade, Which I urge all traders to be using in their trading often, All professionals or experts in trading are usually ready to let go of only 1% of all their capitals or trade-in other to prevent them from a casualty in their trading each time their trading analysis does not go as planned, And it is always advisable or recommended for all traders on market to be ever ready to let go of only 1% of all their capitals or trade in the market in other to help them prevent an extreme loss in their trading market but rather makes fewer lose in their trading. So concerning to what I just talked about each time a trader makes utilization of the 1% rule in their trades, They will be ever ready to lose just 1% of their capital or traders whenever their trading do not go as planned or to their liking.


Now let look at something here in other to get more understanding about the 1% rule. So I wanted to start my trading with just $100 from my demo account. And as I made mention and talked about the 1% rule in trading, So I should always be ready to just let go of only 1% of my trade or funds any time my examining does not go just as planned. So because am having only $100 in my demo account, I must be willing to risk just 1% of my $100 which is only $1 whenever the trading does not go as planned.



Stop Loss and Take Profit


This is also another techniques traders are using in their trading market just to minimize their loss in trades. In the trading market, it is always acceptable and also recommended for all trading to always make sure to put their take profit and also their stop loss each time they want to trade to prevent an extreme loss. So with the stop loss and take profit it also favors traders if their trading goes to their liking or not. So in trades, not every time traders projection will be going in their liking, Sometimes it does go to their liking and at times it does not also move in their liking. That is why the take profit is usually recommended to be put on your trading so it can take your profit anytime your projection goes as planned whiles it is also recommended for traders to put their stop loss in trading because it helps traders reduce an extremely loss each time their trading do not go as planned, The stop loss is going to secure all the capitals which are left in the trade for traders to be used as next trade if their analysis does not go in their liking.



Risk-Reward Ratio


This is also another techniques traders are using in their trading market just to minimize their loss in trades. In the trading market, It is always recommended for trades to be putting their Risk-reward ratio. Anytime a traders enters the trading market and wants to make some trades he or she must be sure to put the risk-rewards ratio. The risk-rewards is made of two separated words that is risk and rewards. So when the trader trades begins to go in their liking as planned this is going to make the trade reach the take profit point and the trader is going to take some profits and also whenever the traders trades do not go in their liking as planned this is going to make the trade gets to the risk ratio point on the market. Due to this it is usually recommended for all traders to be setting their trade in a ratio of 1:2, So with this ratio of the rewards must always be ahead of the risk, This is going to help traders to prevent extremely loss in market.



Now let look at something here in other to get more understanding about the Risk-Reward ratio, Let say I want to begin trade with an amount of $10 from my demo account, So with this am going to make sure to put my reward profit point to be at $20, So with this am going to attain a great earning if my trade can go to be liking as planned, So traders must always study the market well before they start trading.

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Open a demo account with $ 100 and place two demo trades on the following; (Original Screenshots on Crypto pair required).

a) Trend Reversal using Market Structure.

b) Trend Continuation using Market Structure. The following are expected from the trade.

• Explain the trade criteria.

• Explain how much you are risking on the $100 account using the 1% rule.

• Calculate the risk-reward ratio for the trade to determine stoploss and take profit positions.

• Place your stoploss and take profit position using the exit criteria for market structure.


(a) Trend Reversal using Market Structure.


THE TRADE CRITERIA.


  • First, before a trader can trade using the market structure

  • The trader must be sure to look for an understanding trending market chart.

  • The trader must also be sure to look for the higher highs and also the higher lows from the chart.

  • Also each time there is a bearish trending market chart, The trader must make sure to enable the chart market to split the higher lows in other for them to get an understanding of the reversal.

  • Also each time there is a bearish trending market chart, The trader must make sure to enable the chart market to split the lower high in other for them to get an understanding of the reversal.

  • Also the trader should always set their buy or sell order right at the level, At which our market was able to split the structure.

  • And lastly, the trader must always place their stop loss which is always correlated to the take profit on the market chart.


Buy trade of BTC/UDS


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Now when we take a look at my Bitcoin/Tether US it is showing that the market chart is in the bullish market trend, The teacher asked me to locate the reversal level of my cryptocurrency pair which is Bitcoin/TetherUS.


Also when we try to use the 1% rule for the trading of $100, It is always accepted and recommended for traders to be always utilizing a less lot quantity on our specific trade on the market. For this task, I decided to use less lot quantity of 0.1 on my Bitcoin/UDS. When you take a good look for the S/L which was to be 47320, It will be very difficult for me or any trade using this S/L to be losing not more than $4 even if their prediction of the trades do not go to their liking or result in a casualty.



b) Trend Continuation using Market Structure.


THE TRADE CRITERIA.


  • First, before a trader can trade using the market structure

  • The trader must be sure to look for an understanding trending market chart.

  • The trader must also be sure to look for the higher highs and also the higher lows from the chart.

  • Also anytime the trader on market wants to sell their trade, He or she must always be willing to set their sell order right before the point In which our market was creating a lower high on the chart.

  • Also anytime the trader on market wants to buy their trade, He or she must always be willing to set their buy order right before the point In which our market was creating a higher low on the chart.
  • And lastly, the trader must always place their stop loss which is always correlated to the take profit on the market chart.


Buy trade of BTCUSD


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Now when we take a look at my Bitcoin/Tether US it is showing that the market chart is in the bearish market trend, The teacher asked me to locate the continuation of our cryptocurrency pair which is Bitcoin/TetherUS.

Also when we try to use the 1% rule for the trading of $100, It is always accepted and recommended for traders to be always utilizing a less lot quantity on our specific trade on the market. For this task, I decided to use less lot quantity of 0.1 on my Bitcoin/UDS. When you take a good look for the S/L which was to be 46813, It will be very difficult for me or any trade using this S/L to be losing not more than $4 even if their prediction of the trades do not go to their liking or result in a casualty.

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CONCLUSION


Once again I will first like to thank prof @reminiscence01, For coming up with such an incredible lesson to help students especially myself to get more knowledge about trading, And now I can say am getting more knowledge and techniques which am willing to use in my trades when I begin my trading.


MY CHRISTMAS AND HAPPY NEW YEAR TO EVERYONE.


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Hello @shylock2002, I’m glad you participated in the 7th week Season 5 of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:

CriteriaRatings
Presentation / Use of Markdowns1/2
Compliance with topic1.5/2
Spelling and Grammar0.5/1
Quality of Analysis1.5/2
Originality2/2
#Club50501/1
Total7.5/10



Observations:

With risk management, it has provided some regulations to all traders on the market to makes prevent casualty whenever their trades do not go in their own choice or path this will make them safe due to the help of risk management.

Valid point.

The Image used for a trend reversal is incorrect. Observing the chart, the previous Lower lower was held.

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Recommendation / Feedback:

  • The student have completed the assignment for this lesson.
  • The student also answered all the questions in his/her own words.
  • Your overall presentation is good. But you need to improve your writing skills and also work on your markdown styles.

Thank you for submitting your homework task.

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