What are Risk management strategies ?

Today we’re going to Discuss what is Risk management and What are Risk management strategies ?

What are Risk management strategies?
Risk management involves predicting and identifying the financial risks associated with your investments so that they can be mitigated. Investors then employ risk management strategies to help manage their portfolio’s risk exposure. An important first step is to assess your current exposure to risks and then build your strategies and plans around them.

Risk management strategies are plans and strategic actions that traders and investors implement after identifying investment risks. These strategies minimize risk and can include a wide range of financial activities, such as taking out loss insurance and diversifying your portfolio across asset classes.

Risk management strategies :

1. The 1% Rule is a simple risk management strategy that involves risking no more than 1% of your total capital on any investment or trade.

2. Stop-loss orders set a predetermined price for an asset at which the position will be closed. The stop price is set below the current price and when triggered, helps protect against further losses. Take-profit orders work in the opposite way, setting a price at which you want to close your position and lock in a fixed profit.

3. Diversifying your portfolio is one of the most popular and basic tools for reducing your overall investment risk. A diversified portfolio will not have too much invested in any one asset or asset class, thereby reducing the risk of huge losses from any particular asset or asset class. For example, you can hold a variety of coins and tokens, as well as provide liquidity and loans.