INTRODUCTION

Hello steemians this week brings us to another great teachings from our own prof @yohan2on. He made us understand that there is risk in everything so there is risk in trading as well. Therefore it is very important to know how to manage them. That is why its very necessary as a trader to consider Risk Management when trading. It doesn't matter who you are, your level of trading experience, if you don't manage your asset well through Risk Management you are likely to make more losses than profits. This is a brief understanding from the class and will be very happy to take part your task.

Now lets go straight into this weeks task;

1- Define the following Trading terminologies;

Buy stop

• Buy Stop is simply an order which is set above the market order which gives the broker the order to buy a particular asset when it reaches the specified price. The buy stop will either become market order or a limit order as soon as the set price hits that level. This type of order is set to assets with the intention that once the asset has been able to hit a certain price it will definitely rise above it. That there is a chance of it increasing in value again.

Sell stop

• When we talk of Sell Stop, it is basically an order placed by the trader during a bearish trend on chart. It is normally executed a little bit lower than the current market price of the asset. It means the order is placed in the future. The traders place orders just after the chart falls below the support level they have marked down. They immediately place a sell stop order.

Buy limit

• Buying an asset at or below a specified price is what we call a buy limit. It normally allows investors to have full control over how much to pay. Using a buy limit guarantees the investor to pay at that price or even less. Mind you whiles the price is guaranteed, the price which was filled is not guaranteed. Therefore a buy limit order will not be executed unless the asking price is below or at the particular specified price. However, missing out on trading opportunities may occur if the the specified price is not reached.

Sell limit

• It is actually the vice versa of the buy limit, meaning an order is placed in an area of possible sale by the trader. Therefore in order to execute this trade, it requires lots of vision and technical analysis. It must always be placed above the market price. Lets take a look at this assumption, let say the price of an asset is $ 200.00 , we want place a sell limit, it should be around 230.00. When it starts lowering in price after it touches our set price then it can be executed successfully. It is not guaranteed that the set price will be fulfilled and executed. Series of technical analysis must be done before setting this type of order and only when selling but not buying.

Trailing stop loss

• It is when the investors trades away from the current market price due to its broker allowing him or her to trade on a particular percentage order. The aim is to make from for traders to maximize profit in flows than losses. However the percentage will never move if the trade does not favor the investor but vice versa. Its just like when the broker allows a 20 percent trailing stop away from the market price, if the price should move in favor of the trader in that percentage range then it will keep that 20 percent distance. It is normally employed in both bullish and bearish trends when trading. This method is also very profitable when employed in trading.

Margin call

• Margin trading is usually for margin trading, you will receive a call saying you are to make a deposit in your account once the percent is below the required amount. That is the broker sends a notice to the trader concerning his account. With the advice of him making more deposit to be eligible for this type trade.

  (I will also expect an illustration for each of the first 4 terminologies listed above in addition to your explanation)

2 - Practically demonstrate your understanding of Risk management in Trading.

*Briefly talk about Risk management

• When we talk of RISK MANAGEMENT, it is simply an act of extra awareness of a market, how much we may possible loose and find ways of minimizing them. In . Crypto trading investors always look at two major things which are Profit And Loss. Whenever you enter the market, there is a possibility of making losses. We all aim at making profit and therefore is not a problem to most traders but where the problem comes in is when we start making losses, that is when Risk Management sets in. We find ways and means to minimize or if possible prevent losses.

Being an expert in crypto does not prevent one from making losses. Anyone at all can make losses if proper measures are not put in place to control it. Meaning without a proper Risk Management Of Assets , one can loose lots rather than make profits.

You should also have it in mind that not all trade will yield good outcomes. Some will definitely not go as planned, It is either you win or loose. That is why it is very important to control yourself when losses sets in especially your emotions. Never allow it to get the better side of you, because it can lead to frustration and so on. This lack of control of ones emotion can lead to further losses. Therefore it is very good we have absolute control over our emotions when trading especially when loses sets inn.

Furthermore, the goal of setting Proper Risk Management in trading is to manage losses on our road to making more profit in order to stay in business for the long term. These can be achieved through strategic planing and technical analysis.

*Be creative (I will expect some illustrations)

*Use a Moving averages trading strategy on any of the crypto trading charts to demonstrate your understanding of Risk management. (screenshots needed)

• Before we use Moving Average to demonstrate for our home work, let me take you through a short process on how to add it to our chart.

• STEP 1: CLICK ON THE fx INDICATORS

• STEP 2 : SEARCH MOVING AVERAGE IN THE SEARCH BOX AND CLICK ON IT TO BE ADDED..

*Use a Moving averages trading strategy on any of the crypto trading charts to demonstrate your understanding of Risk management. (screenshots needed)

As we all know an asset can not remain in a particular trend forever, if it falls it will definitely rise and it rise it will also definitely fall. This is what is illustrated on the chart using the Moving Average. As we can all see from the chart above they have crossed each other and this is what we refer to as the golden cross. Which trader makes most use out off by selling as soon as this cross is formed. This is because they set a stop loss below what we call the golden cross. This will make the buy trade invalid and take profit will be executed below the resistance level.

CONCLUSION

I really enjoyed this finally lesson by prof @yohan2on on Risk Management. I have taken some vital points and I am sure will help me in my trading journey. I am much delighted in taking part in your task as well. Hoping next season will be something bigger and better. Thank you prof for your lectures once again. I hope to see you next season.

Thank you