3 Best Cryptocurrency Risk Management Strategies to Try in 2024

If you are starting with trading activities without considering adequate managing your position, you should know that this is not a very clever idea and starting point. Logically, no one wins all the time when they are trading, and this is the reality that all experienced traders know about.

This is exactly why all successful traders understand that they need to think about risk management strategies. In general, the risk management plan will help you understand how to handle losing trades.

More precisely, with this strategy, you will know how you can reduce your overall losses. If you successfully manage this concept, you will be on the right path to becoming a professional trader. In this article, we will talk about familiarizing the risk management process as well as which strategies you can use this year and help yourself of gaining some high profit.

What Is Trading Risks Management?


Before with start with some strategies that you can implement this year, let’s start with the explanation of the cryptocurrency risk management system that will allow handling the risk as more effectively as possible. Below, you will find some of the factors that will be crucial for the risk management strategy procedure.

What is the risk per trade?

Risk per trade is actually the value that will depend on the risk profile of every trader. This value will show the percentage of the trading account balance. In general, it can go from 0.1% and up to 4% per trade.

Know about position sizing


Position sizing will express the quantity of the asset that is going to be either bought or sold. As you can conclude, this concept is directly linked to the risk per trade value. Based on this parameter, position sizing will be established. However, there is one significant factor that traders should pay attention to.

We are talking about understanding that leveraged markets offer more profitable opportunities for opening a bigger position with the smaller capital invested. Logically, if the person does not manage properly the position, he can expect quite big losses as the outcome.

How to know when is the initial risk level occurs?

The initial risk level is the location where the losses are stopped initially after the entry is triggered. This level is determined by the trading methodology that a particular trader uses. We will try to express this through the example. If some trade is executed around a support level, the trader will place a long-entry stop-loss that is below that level.

Understand the concept of trailing stop


In general, the trailing stop is referring to the concept of how the stop-loss will be moved when the trade goes in the direction that is expected. The goal is to lock some profits if the market is in the reversal phase.

Traders can use so many different strategies for how to trail the risk. However, we must highlight that the moving averages and trend lines could be some of the important indicators that will reduce risks and protect the made profit.

Profit target is the final step

As you can assume, the profit target refers to those spots where the trader is going to take the profits of the position. The ideal outcome will be if the profit targets have an asymmetrical risk-reward ratio. With this, the potential gains are higher from the risk a lot.

Are you looking for risk management strategies and trading tips?


If you are new in the crypto world, or you just did not have the chance to make some profit out of it, these strategies that we prepared for you will help you turn things around. Why you should risk losing everything if you do not have to do that?

You should not approach cryptocurrency trading with blinded eyes. These strategies that we prepared for you will give you an insight into how you can start your new trading journey knowing that at the same time your risks are reduced to a minimum.

1. Start Using Multiple Time Frames

If you start using this type of analysis, you will help yourself to avoid tunnel vision. In general, most people are making this mistake, they are having insight into the only one-time frame without paying attention to the big picture that market trend comes with.

Experienced traders usually use a top-down concept where the analysis is concentrated on the bigger timeframes. Additionally, they are filtering the market elements by seeking trades that come in lower time frames. If you use multiple time frames in the right way, you will end up with a scenario where the risks are going to be incredibly smaller compared to the potential profit that you can gain.

2. Short Squeeze strategy


This type of strategy refers to the approach that traders use for short-selling and they end up on the wrong side o the market, so they need to edit their losing position. This means that they are betting that the price will fall eventually. They need to buy the assets in the end. Therefore, they will increase the demand that creates explosive movements to the upside so they can get away.

3. Make sure you know what are you doing

As you know, cryptocurrencies are high-risk investments. Everyone that is in this business is aware that they can be extremely volatile. With the unsteady market, there are so many unknown things Prices of cryptocurrencies are going upward, however, you do not want to be in the position where you can be faced with bankruptcy.

It would be the best decision to prepare a solid emergency fund before you start investing in any cryptocurrency. Only in this way, you will not risk ending up in a financial crisis if this starts to become a bed. The first rule of trading is that you never should invest money that you can not afford to lose.

There are over 17,000 cryptocurrencies on the market right now. Some of them are well known and reputable and others are currently not familiar enough. Therefore, before you start with your cryptocurrency journey, research very well about the crypto you want to invest in. One of the most established cryptos is definitely Bitcoin, therefore you can start from this very effectively on a