DEC 9, 2023
The Bull is Back (Managing Your Risk)
by CNNX..BUD6, Olasuky
Risk Management 101
The bull is back.
Different tokens will start seeing massive %%, money flowing from different chains, and meme coins up 100X.
But for most traders and investors, keeping money is more difficult than making it.
So how do you manage your risk?
Here are some risk management strategies:
- Diversification of Assets:
Spread investments across different assets to reduce the impact of a single asset's poor performance.
- Always Hold Stables:
Maintain a portion of the portfolio in stablecoins to mitigate exposure to volatile assets.
- Monitoring market trends:
Stay informed about market trends to anticipate and react to potential risks in a timely manner.
- Exit Strategies:
Establish clear exit strategies for each investment to manage losses and take profits strategically.
- Cut your losses:
Know when to sell those dead tokens; never marry any bag.
- Leverage with caution:
Use leverage cautiously or avoid it altogether to prevent magnifying losses.
- Use Limit Orders:
Implement limit orders when trading to specify the desired price, managing the risk of unexpected market fluctuations. Some Dex offers limit orders.
- Community Feedback:
Consider community sentiment and feedback when evaluating DeFi projects, as they can provide valuable insights into potential risks.
- Create multiple wallets.
Have multiple wallets for different purposes, such as airdrops,trading, NFTs, and savings. This can help you save your funds if one protocol is compromised.
- Beware of links:
Only click links from verified sources; searching for protocol-based links on Google isn’t advisable; scammers can pay for Google ads to push their scam links.
- Follow your own conviction:
Don’t sell your quality bags to buy a meme token; your favourite influencer is shilling. They are mostly paid to do so.
Risk management is a crucial part of trading. Implementing a combination of these risk management techniques can enhance the resilience of a DeFi portfolio and minimise exposure to various risks inherent in the decentralised finance space.
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