Risk Management
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Risk refers to the potential of experiencing financial losses during a trade. For instance, if you purchase a cryptocurrency at a specific price and its value subsequently decreases, you could encounter a loss of a certain amount. The level of risk corresponds to the magnitude of potential loss. In the cryptocurrency market, digital asset prices often exhibit high volatility, implying they can undergo rapid and unpredictable fluctuations. As a result, the market poses inherent risks for investors.
Conversely, leverage allows you to engage in trading activities with more funds than what is available in your account. It serves as a means to magnify both potential profits and potential losses. Conceptually, it resembles borrowing money for trading purposes. To illustrate, suppose you possess $1,000 in your account and desire to trade with $10,000; leverage enables this possibility. Utilizing leverage can be advantageous if the market behaves as anticipated, but it can also be perilous if the market moves unfavorably against your position.
Risk signifies the possibility of experiencing a financial loss in an investment, whereas leverage enables trading with more funds than what is available in your account. Both factors hold significance when engaging in cryptocurrency trading due to the market's high volatility and inherent risks. Nonetheless, by implementing appropriate strategies and conducting thorough research, it is feasible to pursue profitable outcomes while effectively managing risk and leverage.
For more information regarding risk-management & what is already built in to my strategy to help mitigate this, as well as assist you with this through the power of automation, please refer to this: Risk Management Built In?
Last modified 3mo ago