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Keep Calm and Manage Risk: Crypto Tips That Work

The market will always have its storms. These strategies don’t eliminate risk, but they do give your portfolio a better chance of weathering the waves. Here are five strategies worth making part of your playbook.

Invest wisely

Position Sizing

Don’t put all your eggs in one basket. Only invest a small portion of your total capital in any single cryptocurrency. This way, if a trade goes badly, it won’t wipe out your entire portfolio. A common approach is to risk no more than 2% of your total funds on a single position.

Stop-Loss & Take-Profit Orders

Emotions can be dangerous in crypto. These tools can help. A stop-loss automatically sells a coin if its price drops to a certain level, limiting losses. A take-profit does the opposite, securing gains when a coin reaches a target price. They help you stick to a plan instead of reacting to panic or excitement.

Diversification

Spread your investments across different types of cryptocurrencies and projects. This could include major coins, promising smaller projects, or even stablecoins that maintain value. Diversification reduces the risk that one bad investment destroys your portfolio.

Risk/Reward Planning

Before entering a trade, think about how much you could potentially gain versus how much you could lose. Many investors aim for trades where the potential reward is at least three times the possible loss. This way, even if only half your trades succeed, you can still come out ahead.

Rebalancing & Profit-Taking

Over time, some coins may grow faster than others, making your portfolio uneven. Rebalancing means adjusting your holdings back to your intended allocation. Profit-taking involves selling a portion of coins that have increased in value and redistributing the gains, keeping your portfolio balanced and locking in returns.

Become advanced in trading

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IMPORTANT NOTICE: This sponsored content is for informational purposes only and not intended for persons in the United Kingdom. If you are accessing this from the UK, please note that this content has not been approved by an FCA authorised person. Cryptoassets are not regulated by the FCA and are high risk. The value of cryptoassets can go down as well as up and you may lose all your money. The content is for information only and not investment advice.