Been trading crypto for a while but still struggle with proper risk management.
Position sizing feels off and I keep letting emotions drive my decisions when markets get volatile.
What risk management rules actually work in practice?
Never add to losing positions and cut winners at resistance.
Size your positions based on volatility, not just your account balance. I’ll risk 2% on Bitcoin but only 0.5% on altcoins since they swing way harder. Set price alerts instead of staring at charts all day. Saves your sanity. Set alerts for your entry and exit points, then walk away. Keep cash on the sidelines for opportunities. When the market tanks, having 25% in stablecoins lets you buy the dip.
Risk 1-2% per trade max and set your stop losses before you enter. Makes it way easier to keep emotions in check.
Identify your maximum loss first. This simplifies position sizing. Then calculate your position based on stop loss distance. Given the volatility in crypto, I typically risk under 1% per trade. Documenting your strategy in advance can aid you when emotions start running high.
Position sizing? Work backwards from your account balance. I always know my max loss before I even touch a chart.
I use fixed dollar amounts for crypto trades, not percentages. $200 max loss per position. Find my entry and stop, then calculate how many coins I can buy.
The emotional side was tougher. I keep a trading journal and write my plan before entering any trade. When things get wild, I just read what I wrote when my head was clear.
Take partial profits on the way up. Crypto moves fast - I sell 30% at my first target, then let the rest ride with a trailing stop.