RISK MANAGEMENT

Risk Management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings. A successful risk management program helps an people or organization consider the full range of risks it faces. Risk management also examines the relationship between risks and the cascading impact they could have on an strategic goals.

As the market continues to grow rapidly, many people forget that crypto trading is not only about profits, but also about risks. And if you don’t want to drain your deposit on the very first day, you have got to keep risk management rules in mind. The right strategy will help you to make a huge profit and decrease the risk of potential losses.

In cryptocurrency trading, risk is the likelihood of losing invested funds. Therefore, risk management is the ability to predict and control possible losses from an unsuccessful transaction.

Why is risk management so important? Here is a simple example. You decided to invest in cryptocurrencies and bought Ripple, a relatively strong and stable project, for your entire deposit.

But unexpected things happen when you least expect them to happen (sarcastically) — XRP dropped. And dropped by as much as 50%. By the way, these are not abstract numbers. Just take a look at Ripple’s chart for the last year and you will see continuous ups and downs.

To sum up, you can lose half of your deposit just by carrying out one single deal. Of course, this is a very dramatic example. Even beginner traders rarely make such obvious mistakes.

source: medium/exmo-official