Risk Management And Trade Criteria....#001

source

---

---

What's Risk Management

---

---

When we talk about risk management is more or like the act of assessing with the aim of reducing native impact of a business decision on an organization or individual.

In trading though what do we mean by risk management. It's almost the same thing trying to minimize risk to mitigate the effect of a bad decision.

We know losses it's something common in trading no matter how good one is and no matter how good a strategy is or emotional descipline one has if the person doesn't practice proper risk management then he won't success.

Risk management often means trying to manage risk in a way when we suffer inevitable loss as a result of bad trading decision or bad market conditions it wouldn't affect us too badly, no one loss or few lossing streak should make us lose all our capital.

Risk management is an important trading criteria and one who can't properly manage trading risk it's bound to fail even before he begins.

Because we are in a very volatile market it's imperative we exercise proper risk management if we don't want to be handed our backside by the market.

Today when one enters the crypto market and doesn't practice proper risk management I see no way that person will succeed even if they see short term profit it will only be a fluke and overtime they won't be able to maintain long term consistency.

---

---

Importance Of Risk Management

---

---

In trading, risk management is crucial because it helps traders protect their capital and maintain sustainability in their trading activities. Here's why it's important:

1) Preservation of Capital: When one practice proper risk management it makes it hard for one to incur significant loses which means no one lose could cause us to lose our capital and that means opportunity to take advantage of next trade.

2) Reduction of Losses: Another benefit of risk management is reduction of losses, with use of stop losses and risk reward ratios we can manage losses properly meaning a few loses won't wipe out majority of our account size with proper risk management.

3) Consistency and Sustainability: A disciplined approach to the market ensures one remains consistent and proper risk management ensures sustainability in the market.

4) Emotional Control: When we know we aren't risking too much and for every trade we risk only a small portion of our account we will have control over our emotion.

Good trading plan together with proper risk management helps put our emotion in check.

---

---

Conclusion

---

---

Risk management is integral in the success of every trader, anyone who has been in this business for long whether crypto or forex trading and has been delivering for long is able to do so because they proper risk management, it's crucial for the success of every trader.