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    What is Risk Management?

    Risk management in crypto trading means controlling potential losses through position sizing, stop-losses, diversification, and never investing more than you can afford to lose.

    Full Explanation

    Risk management is the practice of identifying, assessing, and controlling threats to your trading capital. Key principles: 1) Never risk more than 1-2% of portfolio on a single trade. 2) Always use stop-losses. 3) Diversify across assets. 4) Don't invest money you can't afford to lose. 5) Avoid excessive leverage (especially for beginners). 6) Take profits along the way. 7) Keep emergency funds separate from trading capital. In crypto, where 80%+ drawdowns are normal, risk management is survival.

    Example

    With a ₹1,00,000 portfolio, risk max ₹2,000 per trade (2%). If your stop-loss is 10% below entry, position size = ₹20,000.

    Related Terms

    Stop-Loss OrderLeverage TradingVolatilityDollar Cost Averaging (DCA)
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