Crypto Trader: How to Manage Risk and Profit Efficiently
As a crypto trader, it’s vital to understand the concepts of risk and profit. To put it simply, the more you risk (smartly) the more you’ll profit. This is easier said than done, however. Finding the right ratio of risk and profit is a balancing act that may take some trial and error.
Crypto trader wisdom: invest and trade with small amounts
Despite the actions of many on the market, crypto trading should not be like casino gambling. One should never “bet the house” on investments with high risk. Instead, the wiser choice is to invest a portion of your portfolio into risker bets while maintaining the majority of the portfolio in safe, stable investments.
Statistically speaking, the larger your “bet” the more risk and profit come with it. Profiting is always nice but if you want to guarantee profit over a longer time, then it’s important to effectively manage risk in the short term. Realistically, large bet sizes with high-risk eventually outweigh the potential profit overtime on average. Let’s look at the numbers
Crypto traders should rely on skill and not luck
Let’s say you have 1 BTC that you want to invest in. Now let’s look at what happens if you lose 50% of that BTC twice in a row compared to doubling 50% two times.
In the event of a 50% loss x2:
1 BTC turns into .25 BTC (loss of 50% takes you to .50 BTC then another 50% loss takes you to .25 BTC).
In the event of a 50% gain x2:
1 BTC turns into 2.25 BTC ( .50 BTC from the first 50% gain and then .75 BTC the second 50% gain.
If you turn your 1 BTC into .25 BTC with poor risk management, then you’re facing a large climb back up to 1 BTC. Then, the 2.25 BTC is a distant dream at that point.
Yes, it will take you more time to get to 2.25 BTC using smaller investments, but looking at the stats, you’ll have more chances to gain opportunity and avoid loss, which is the goal for every crypto trader.
Multi HODL™: the tool for every crypto trader
Multi HODL™ on YouHodler is designed for both traders pro and beginner to multiply their crypto assets with managed risk and profit. The process is simple. Take 20% of your assets from YouHodler savings account to make small, incremental bets. Meanwhile, the other 80% is earning 12% a year in a safe, stablecoin savings account.
A crypto trader can set their desired level of risk and profit amount. They can also set a “Take Profit” point which will close the process and deposit the crypto back into their savings account.
This is a simple, hands-free way to limit your risks in crypto trading while still being exposed to potentially high gains. Visit us at YouHodler.com and try it today.