Risk and Money Management in Crypto: Bybit Engage

1. FOMO (Fear Of Missing Out) Won’t Beat You If You Have a Plan

FOMO is a term often floated around in the crypto world. Because of FOMO, many crypto traders still act on emotion instead of having any sort of plan, and that, unfortunately, more often than not is only going to end badly. A plan of when to buy, and when to sell, as well as risk and money management (see tips 3 and 4) are crucial if you want to be a successful trader.

2. Stop Loss

This is a very useful tool in risk management that shouldn’t be forgotten about. Sometimes it may be obvious where to place Stop Loss, while sometimes it may be more difficult. The market may suddenly change direction and you may be at risk of liquidation and losing all your margin if this happens, but this can be avoided if you set up a Stop Loss order.

3. Calculating The Potential Risk Against Potential Profit

When conducting a trade, it is imperative to consider its potential risk against the potential profit. To calculate your risk/profit you can use this formula:

4. Money Management

When determining the risk of a trade, money management is also very important. Risking 1–2 % of your total trading capital (money you have set aside for trading) is sensible if you want to make profit long-term.

5. Keep 30% of Your Trading Capital in Stable Coins

Cryptocurrency markets are notoriously volatile, so it is sensible to keep a set amount of your trading capital in stable coins, and 30% is a sensible amount. These can be easily converted to fiat if needed and can also act as a contingency in a worst-case scenario — for example, if you’re liquidated.

6. Don’t Bet Against the Trend

Remember, trend is your friend! If a trend is bullish — do not sell. Wait for a correction and buy. It is risky to buy when the price is in free flight because of the risk of an impending correction and potential liquidation, so it is always best to buy at times of correction for this reason.

7. Only Invest What You Can Afford to Lose

This may seem like obvious advice, but only invest what you can afford to lose. Ultimately, cryptocurrency markets are not just a money-making machine, it takes a lot of patience to make a long-term profit. It pays to be sensible with your money, and it certainly is sensible to only invest what you can afford to lose.

8. Sleep Well

Here at Bybit, you can trade 24 hours a day, 7 days a week, but that doesn’t mean you should take that as a literal invitation to do so! To be a successful trader, you need to have the mental capacity to think rationally, and you can’t do that if you don’t get a good nights sleep. And don’t let trading overcome your day-to-day life, you still have a life to lead.

9. Use Bybit!

Perhaps the most useful tip of them all! Bybit is committed to offering the most smooth trading experience possible, and we always put the needs of our customers first. Not only do we offer 24/7 multilingual customer service, your funds are safe with our multi-signature cold wallet, you don’t need to worry about overloads thanks to our 100,000 TPS matching engine, and our advanced order system allows traders to set up multiple order types. If you’re not already a customer of Bybit, then get your welcome bonus of up to $60 here!



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