What are the Traditional Methods of Bitcoin Risk Management?

BTCUSD Equity Management in Intraday Trading Guide

In any biz, so as to earn a profit a btcusd trader must learn how to manage risks. To make profits in bitcoin trade you need to learn about the different bitcoin equity management strategies illustrated on this learning bitcoin trading guide web site.

In bitcoin online trading, the risk to be managed are potential losses. Using bitcoin risk management rules will not only protect your btcusd crypto currency account but also make you profitable in the longterm.

What is Draw-Down in BTCUSD Crypto Currency Trading?

As btcusd crypto currency traders the number 1 risk in bitcoin trading is known as draw-down - this is the sum of money you've lost in your crypto trading account on one bitcoin trade.

If you have $10,000 bitcoin trading capital and you make a loss in a single bitcoin trade of $500, then your bitcoin draw-down is $500 divided by $10,000 dollars which is 5 percent% bitcoin trade draw down.

What's Maximum Bitcoin Crypto Currency Draw Down?

This is the total sum of money you as a btc/usd trader have lost in your bitcoin trade account before you start making profitable trades. For example, if you have $10,000 bitcoin capital and make five consecutive losing bitcoin trade positions with a total of $1,500 trade loss before making 10 winning trades with a total of $4,000 profit. Then the bitcoin trading maximum draw-down is $1,500 dollars divided by $10,000, which is 15% maximum btcusd crypto currency draw down.

Relative Crypto Draw Down and Maximum Bitcoin Draw Down in Bitcoin - Risk Management Bitcoin Techniques in Trading Bitcoin

BTCUSD Crypto Currency Draw-Down is $442.82 dollars (4.4 %)

Max BTCUSD Crypto Currency Draw Down is $1,499.39 dollars (13.56 %)

To learn how to generate above bitcoin trade reports using MT4 btcusd crypto currency platform: Generate BTCUSD Crypto Currency Reports on MT4 Guide - Bitcoin Position Management Bitcoin Strategies - Risk Management Bitcoin Techniques in Trading Bitcoin

BTCUSD Funds Management in Intraday Guide

The trading example illustrated below shows the difference between risking a small percent of your bitcoin capital compared to risking a higher percentage. Good Bitcoin Money Management in Intraday PDF principles requires you not to risk more than 2% of your total bitcoin trading equity on 1 single bitcoin trade.

Bitcoin Percentage Risk Technique

Bitcoin Money Management in Intraday Trading Tutorial - Risk Management BTCUSD Techniques in Trading BTCUSD Crypto

2% & 10% Bitcoin Trade Funds Management Rule - Bitcoin Money Management in Intraday Trading Tutorial - Bitcoin Risk and Money Management in Guide

There's a big contrast between risking 2% of your btcusd equity compared to risking 10 % of your equity on one bitcoin crypto currency trade.

If you happened to go through a losing btcusd crypto currency streak and lost only 20 trade transactions in a row, you'd have gone from starting btcusd crypto currency equity balance of $50,000 dollars to only having $6,750 left in your account if you risked 10% on every bitcoin trade. You would have lost over 87.5 % of your bitcoin trading equity.

However, if you only risked 2 % you would have still had $34,055 in your bitcoin account which is only a 32% loss of your total bitcoin account equity. This is why it is best to use the 2% risk management method in cryptocurrency.

Difference between risking 2 % and 10% on a single bitcoin trade is that if you risked 2 % you would still have $34,055 in your bitcoin account after 20 losing trade transactions.

However, if you risked 10 % you would have only $32,805 in your btcusd crypto currency account after only five losing bitcoin trades that's less than what you'd have in your trading account if you risked only 2% of your account and lost all 20 bitcoin crypto transactions.

The point is you want to setup your Bitcoin Money Management in Intraday Trading Tutorial rules so that when you do have a loss making period, you will still have enough bitcoin equity to trade next time.

If you lost 87.5% of your btcusd crypto currency trading capital you'd have to make 640 % profit to get back to break-even.

As compared to if you lost 32% of your btcusd crypto currency capital you'd have to make 47 % profit to get back to the break-even. To compare it with btcusd crypto currency examples 47% is much easier to break even than 640% is.

The trading chart below shows what percentage you'd have to make so that you get back to break even if you were to lose a certain percentage of your bitcoin trading capital.

Concept of BreakEven - Bitcoin Position Management Methods

What are the Traditional Methods of Bitcoin Risk Management? - Risk Management BTCUSD Techniques in Trading BTCUSD

Cryptocurrency Account Equity and Break Even - What are the Traditional Methods of Bitcoin Risk Management? - Bitcoin Position Management Methods

At 50% btcusd crypto currency draw-down, one would have to earn 100% on their bitcoin capital - a feat accomplished by less than 5% of all bitcoin traders world-wide - just to breakeven on a bitcoin account with a 50% loss.

At 80% crypto draw down, one must quadruple their bitcoin trade equity just to bring it back to its original equity. This is what is known as to "break-even" - which means - get back to your original btcusd crypto currency trade balance which you started with.

The greater the equity you as a btcusd trader lose, the harder it's to make it back to your original bitcoin trading account size.

This is why as a trader you should do everything you can to PROTECT your bitcoin trading account equity. Do not accept to lose more than 2% of your bitcoin equity on any one single btcusd crypto currency trade.

Bitcoin Money management is about only risking a small percentage% of your bitcoin trading capital in each bitcoin trade so that you can survive your losing streaks and avoid a big draw-down on your account.

In bitcoin trading, traders use stop loss cryptocurrency orders which are put in order to cap btcusd crypto currency losses. Controlling risks in btcusd crypto currency trading involves putting a stoploss order btcusd crypto currency order after placing an new btcusd crypto currency trading order.

Effective BTC/USD Crypto Equity Management

Effective bitcoin trade risk management requires controlling all risks in cryptocurrency and one should come up with a equity management bitcoin system and a equity management bitcoin trading plan. To be in bitcoin trade or in any other biz you must make decisions that-involve some risk. All bitcoin trading factors should be interpreted to keep risk to a minimum and use the above bitcoin money management tips on this article - Bitcoin Position Management Strategies.

Ask yourself? Some BTCUSD Crypto Currency Tips

1. Can the btcusd crypto currency risks to your btcusd crypto currency trade activities be identified, what forms do they take? and are these clearly understood & planned for in your bitcoin trade plan? All the btcusd crypto currency risks should planned for in your btcusd crypto currency trading plan.

2. Do you grade the risks encountered by you when btcusd crypto currency trading in a structured way? - Do you have a equity management strategy & a bitcoin trade plan? have you as a trader read about this learning bitcoin trading guide which is well covered and discussed here on this learn bitcoin site for beginners.

3. Do you know maximum potential trading risk of each exposure for each trade that you place?

4. Are trading decisions made on the basis of reliable & timely bitcoin market information & based on bitcoin strategy or not? Have you read about btcusd crypto currency systems on this studying btcusd crypto currency site.

5. Are the bitcoin risks big in relation to the trade turnover of your invested bitcoin capital and what impact could they have on your btcusd crypto currency profits margins and your bitcoin account margin requirements?

6. Over what time periods do the bitcoin trade risks of your bitcoin crypto currency trade activities exist? - Do you hold bitcoin trades long term or shortterm? what type of btcusd crypto currency trader are you?

7. Are the exposures in trading one off or are they recurring?

8. Do you know about methods in which your btcusd crypto currency trading risks can be reduced or hedged & what it would cost in terms of profit if you did not include these stipulated measures to minimize potential loss, and what impact would it make to any up side of your btcusd crypto currency profit?

9. Have your btcusd crypto currency equity money management guidelines been adequately addressed, to ensure that you make & keep your bitcoin trading profits.

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