Managing risk in the markets is vital to our long term success. There are a number of strategies that can be employed to do this. It only takes a quick search to come up with these different approaches.
In this video I discuss a few ways to do this and why it is so important. Blowing up one's account is never a good thing.
▶️ 3Speak
You've essentially said it all, a lot of people do not take profit all the way to the top, since they don't know the top or the limit before a bear hits sometimes they get burned pretty bad.
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Like all successful traders say, take profits along the way since the market is so unpredictable. You don't have to aim for the exact bottoms or tops since you are a winner so long as you make money.
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That's a good tip. It's a simple concept, but a lot of people completely ignore it and end up exposing themselves to a lot of unnecessary risks or leaving easy money on the table.
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Speaking of taking profits my strategy is to exchange the coins that I don't want to keep anymore to tether and then to invest in the coins that I really want in the bear market
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Summary:
In this video, the speaker discusses the importance of money management in investing, also known as risk management. He emphasizes the need to spread risk and reduce downside exposure through various techniques like diversification and setting rules to preserve capital. The speaker highlights the challenges of starting out with limited funds and navigating market uncertainties, especially in terms of determining market tops and trend reversals. He advises against putting all investments in one place, warns against relying solely on diversification, and suggests strategies like selling on the way up and dollar cost averaging for buying assets at different price levels. The goal is to continuously reduce risk, stay informed, and protect investment portfolios.
Detailed Article:
The video delves into the core concept of money management within investing, also termed as risk management, that plays a crucial role in safeguarding one's financial assets from market volatility and downturns. The speaker explains that money management goes beyond just investing and encompasses a wide range of principles to mitigate risks and reduce potential losses.
One key aspect emphasized by the speaker is the significance of diversification in spreading risk. While acknowledging the traditional advice of not putting all eggs in one basket, he brings attention to the practical challenges faced by beginners with limited capital to effectively diversify across various asset classes. He voices a note of caution against overly relying on diversification, highlighting its limitations during market collapses and bear markets where most assets plunge regardless of diversification efforts.
Furthermore, the speaker stresses the importance of setting rules to preserve capital and navigate market uncertainties effectively. He discusses the need for establishing clear strategies for asset entry and exit points, which can be determined based on technical analysis, percentage moves in the market, or specific parameters defined in an investment program. The speaker presents the idea of selling on the way up as a strategy to lock in profits gradually, especially during late-phase bull runs, as a means to reduce exposure and safeguard gains.
The speaker also sheds light on dollar-cost averaging as a prudent approach to buying assets at different price points to counter the challenge of timing market bottoms accurately. By investing fixed amounts at regular intervals, investors can benefit from an average cost base and potentially reduce the impact of market fluctuations on their overall investment.
Moreover, the speaker underlines the need for continuous learning, staying informed, and actively managing investments to minimize risks effectively. He emphasizes the significance of knowledge, attention to detail, and regular monitoring of holdings across various asset classes like cryptocurrencies, equities, commodities, and more. The speaker also highlights the importance of assessing the market stage to make informed decisions about where to allocate funds for better risk management.
In conclusion, the video serves as a comprehensive guide on navigating the intricacies of money management in investing, providing valuable insights, practical tips, and strategies to protect investment portfolios, reduce risks, and improve overall financial outcomes.