The professor @yohan2on discussed the topic of risk management this week. Risk management is a very interesting part because this is something that traders need to pay attention to before deciding to make a trade. Let's go for the homework content.

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BUY STOP

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Buy stop is an order, which means buying higher order than the current price. Looks different when you hear the term buying a bit higher than the current market price makes feel odd and foolish but it is not it keeps the key point of the buy stop order. You can see the above image as a reference.

When the pro trades makes a chart and analyze the market movement I have no current market trend which obeys the buy stop hence I made a chart of past happened. Here in this chart, you can see the below button level was price range of 55600$ of USDT. Traders should need to wait for the the market movement to attain the first resistance level where we traders predicted take a perfect buy stop entry. Due to the perfect entry you can see the result the market become bullish Trend. This gives the confirmation that we can place in strong buy order.

SELL STOP

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Sell stop is an order, inverse similar to which means selling lower than the current price. Looks different when you hear the term selling a bit lower than the current market price makes feel odd and foolish but it is not it keeps the key point of the sell stop order. You can see the above image as a reference.

For example you can see the above chart we have drawn. Before drawing this chat we have a good knowledge about drawing resistance line and support line. Resistance line is marked at higher high prices support line is drawn at lower low prices. Here you can see the current movement of the market goes below the lower lower which means the bottom support there we should need to place our sell order because the market trend has changed to bearish. From here we should need to placed our sell stop order.

BUY LIMIT

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Buy limit is defined as the value of token to be brought by traders independent of market current movement. This order may filled or may not filled.

This buy limit is the most basic trading thing which we all doing. At initial time of cryptocurrency I too don't know about the stuff like stop loss, one cancels other etc. In buy limit order the trader can able to place the order of what they wish to buy.

For example, if I wish to buy Bitcoin fir 39000$ mean I can able to place the open order by filling the price when my order need to proceed. This will get filled when the price moves down it may take too many time like a year why not maybe in hours. In this type of order we need to wait for long period of time. We doesn't need any technical hint to enter the market. Maybe your price was predicted and happens within a hour mean you can place and order can be executed without your presence this will helps us to make a trade while we sleep as this cryptocurrency market runs 24 by 7.

SELL LIMIT

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Sell limit is defined as the value of token to be sold by traders independent of market current movement. This order may filled or may not filled depends on future market movement after open order is placed.

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This is similar to buy limit order. When we enter our sell price the open order will be created for the price. You can see that in above image. But the current market value is 284$ I wished it to sell at 400$ when the market price attains the value of 400$ my order get filled without my presence that's what the great advantage of it.

TRAILING STOP LOSS

Trailing stop loss is all about placing an order of a certain percentage which differ from the current market price. The cryptocurrency market is much more volatile. Due to high price fluctuations here, anything can happen in the market at any time. So there is a possibility of a big loss. In this case, it is very important to know the use of trailing stop loss. More also, trailing stoploss moves in the bullish direction and not in the bearish direction.

For instance, if a trader buys tokens worth $100 and uses the trailing stop loss order with percentage at 5% which is $5 that means when the price moves above $110 the profit of $10 will be locked in and it continues, but if the price then declines back to $105 the trade will be stopped by the trailing stop loss before it moves below that, resulted in profit.

MARGIN CALL

Margin call happens when an individual or trader's margin account is lower than the amount required by the broker. Margin call is given when there is no free margin in account. This means that the trader's account has become zero, so he has to deposit to trade. Brokers always do alert when margin level minimum condition is reached.

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Margin calls should be avoided through risk management. Investors should be risking between 1-3% of the invested capital per trade depending on the investor's experience level, and also avoiding stacking trade positions. The use of stoploss and take-profit also checkmate margin call in trading accounts. Margin calls should need to avoided that's it.

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QUESTION 2

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Practically demonstrate your understanding of Risk management in Trading.

• Briefly talk about Risk management
• Be creative (I will expect some illustrations)
• Use a Moving averages trading strategy on any of the crypto trading charts to demonstrate your understanding of Risk management. (screenshots needed)

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The greatest mantra of trading is need to enter the market at perfect time and exit the market at perfect time. This perfect time can be attained by the risk management. There are different ways to make the risk management to work.

Moving average

Moving average is a indicator which is used to compare the average market moment for our customized time periods. For example you can see in the below image,

Here the green line indicates the moving average of 10 days and red line indicates the moving average of 25 days hence we can able to predict the money inflow of the chart which we are analysing. When the movement of market crashes the movement of previous movement position we need to sell our portfolio and wait for the movement to go below and make an perfect entry. Here in above screenshot you can see when we enter the market below 25 days average we can able to book the good profit. By use of these basic tools like moving average will help us to determine the time of market entry and sell.

Before doing any trade there are certain criteria we need to keep in our mind.

• Which market we are going to invest ?
• History of the market which are going (recent breakout reasons).
• Fund which we are willing to invest.
• Fund which we can able to loose.
• Market analysis.
• Stop loss.
• Duration of our holding.

Which market planning to invest there are different types of market. For example, during the lockdown time the stock price of crude oil went down because there is no transportation in the World which we can able to easily guess it's happenings.

History During the last bull run of Bitcoin there is numerous factors. As number of institutions or country adapt to the Bitcoin usage will increase its attention. Elon Musk the richest one who accepted Bitcoin as his payment of his product, EI Salvador crypto adaption.

Quantity we willing to invest the amount of money which we are willing to invest is also an important factor. And the fund which we invest should not pre scheduled needed money. And always put money which you can't need for a year.

Market analysis as I mentioned above the moving average is also an one of the market analysis tool there are numerous tools available in the tradingview you can use and get better use of it.

Stop loss which helps most of the traders fir example you can see I explained about the trailing Stop loss in above passage is a best tool and normal stop limit is also helpful for the traders to limit their loss.

Period of holdings before investing we need to decide that wheather we are investing for long period or short term trade. I always recommend to analyse and invest in the long term trade which helps us to keep away from continual market checking and hence we can save us from several heart attacks.🤣

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CONCLUSION

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Thank you professor @yohan2on for the wonderful lesson. I learnt a lot and it was helpful for many especially the risk management is the key factor where many new traders need to understand.