Risk Management For Crypto Positions

Crypto's higher typical volatility compared to many traditional markets makes deliberate risk management especially important. The core principles are not unique to crypto, but the stakes of ignoring them tend to be higher given how quickly prices can move.

Core Practices

• Position sizing — deciding how much capital to allocate to a single trade relative to total account size, so no single position can cause outsized damage.
• Stop-loss placement — defining in advance the price at which a losing trade will be closed, rather than deciding reactively under stress.
• Diversification — spreading exposure across multiple assets rather than concentrating in one, while recognizing that crypto assets can still move together during broad market stress.
• Avoiding excessive leverage — since leverage magnifies both gains and losses, especially given crypto's typical volatility.