There are countless instruments and almost as many trading strategies in the trading universe today. Many of these are presented as the “holy grail”. This certainly does not exist. Of course not every trade can be a winner. The more investors and traders become aware of a particularly profitable method and follow it, the more unprofitable it becomes for the individual market participant.

The key to bitcoin trading success: risk and money management

In addition to having the right mental attitude, the key to trading success lies in the areas of risk and money management. This area is still underestimated by many investors and traders. Inexperienced investors in particular often make the mistake of not setting any stops to protect themselves or of overweighting individual positions too much. Sooner or later, the result will inevitably appear in the form of excessive setbacks and losses or a lack of consistency in the trade results. Thus, before you click on the bitcoin 360 ai sign up button, you have to know the risks. In doing so, you can manage your money properly.

What is the difference between risk management and money management?

First of all, risk management and money management are two different terms. However, they are often mixed up or confused.

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Money Management: The best possible use of capital per trade

Money management refers to the use of capital per trade to increase and optimize performance. For example, how large is a position size or how is its size measured? How high is the maximum risk in relation to the capital employed? In addition to the answers to these questions, it is also about how large a position should be in order to achieve the maximum return. For example, risking a constant amount of money per trade or a percentage of total capital can make a huge difference to longer-term outcomes.

Risk Management: All aspects of risk

Risk management is a bit more global than money management. As the name suggests, it refers to all risk management and control components of risk. A requirement of risk management could be, for example, not to hold more than three positions from one industry or three closely correlated currency pairs at the same time. Also the volatility, i.e. the range of fluctuation, can play a role in the area of ​​risk management. Another aspect of risk is the liquidity of an asset.

Much in the area of ​​risk management depends on the strategy. It also depends on the goals and the individual risk tolerance of an investor or trader. For this reason, money management is considered to be the general starting point for optimizing risk and return.