A few months ago, I experienced one of my most rewarding trades, turning $300 into $41,000 in just three weeks. This wasn’t due to luck or chance—it was the result of patience, discipline, and a well-defined risk management strategy. Along the way, I learned invaluable lessons about avoiding over-investing and the pitfalls of excessive leverage.
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The Problem with Emotional Investing
When markets are on the rise, many traders fall into the trap of emotional investing. They risk their entire portfolio in hopes of massive gains. However, when the market reverses, they face liquidation, often losing everything.
The crypto market is unpredictable—what goes up quickly can come down just as fast. Without a proper strategy, the risk of total loss is significant. The key lesson? Manage your risk, especially during volatile conditions.
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Risk Management: The Foundation of Successful Trading
Here’s how I manage my trades to minimize unnecessary losses and maximize potential gains:
1. Never Invest Your Entire Portfolio
Always trade with a small fraction of your wallet. Personally, I never risk more than 1–2% of my portfolio on a single trade. For example, with a $1,000 portfolio, I risk only $10–$20 per trade. While these amounts might seem small, consistent gains from low-risk trades accumulate significantly over