Risk management post!

This is a term you hear a lot of traditional finance. It means: how much risk are you willing to take? Or better, how much can you handle without losing any sleep over it?Your RA decides your portfolio balancing and profit taking plan.First of all and you probably heard this before: you should never invest more than you're willing to lose.Profits are nice, but the feeling of losing profits for most is worse than the euphoria they felt when it went upwards.

For newcomers a complicated topic. Everybody coming in has heard of big returns in crypto, easy money. It's not, because when they finally are in profit, most give the profits back to the market.When you get in at the right time making profits is easy, but what about keeping them?It starts by making a plan and executing it.

Rule of thumb if you're inexperienced:

Sell 20%-25% of your coins every time

1) it does +50% or

2) +100%.

Keep 10% in case it's 'the holy grail'.

It also depends on the marketcap/potential of the coin. High marketcap go for (1), if it's low marketcap go for 2.

There are many factors to take into account when setting the levels. TA resistance levels, psychological resistance levels, fundamentals and of course gut feeling.Taking losses is also a part of risk management. Be aware of the support levels and set stops if you can or monitor it closely.

In bull markets we're almost conditioned to think of uponly prices. Twitter is euphoric, you are euphoric, but the market moves in waves. Huge moves up almost always correct eventually. Get this in your head: unrealised profits are not actual profits yet.

When you do make life changing money, take it or at least a good part. You need time to process this in your head, and keeping it all in the market doesn't help to process it. Opportunities will arise almost daily, don't be afraid you'll miss out

In general it's good to keep about 25% in USDT, 75% crypto. Depends on the market conditions. When the market is bottoming after a big crash USDT % can be lower, after huge run ups higher.

I also would advise to keep a good balance between your fiat money and crypto portfolio. Many have 90%-95% of their total net worth in crypto. Severe bear markets wil still hit us despite the market maturing.

Rule of Five is important to keep in mind for portfolio risk management. I know enough people who go all in on one coin, what if something happens that no one could have predicted? Rule of five is a proven strategy which is backed by data.Of course, it needs nuance. Investing in low caps could advocate having more coins, for instance.
In general, I think ten coins is the max you should be in to properly manage and stay up to date to the developments.You could look for a balance between higher and lower risk.
For instance between high, medium and low cap coins. As example, 45% $BTC $ETH, 35% medium caps, 20% low caps.

Find your own undervalued coins and have the time to do this research properly. Find out what works for you.You can also choose to hedge your portfolio by going short on futures or buy options.

Crypto can be stressful, but sticking to decent risk management really helps. If it's still stressfull, remember: It's better to sleep well, than to eat well.Hopefully this puts risk management more top of mind, because it's a blind spot for many.
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