Risk Management for Crypto Beginners | NEVER Lose in Crypto Again
In this solo instructional video, The Art Of Crypto argues that the primary reason 95% of crypto traders lose money is not a lack of magical indicators but poor risk management. He emphasizes that beginners should avoid high leverage, keep position sizes small, and adhere to a 1‑2% risk‑per‑trade rule. Using real‑time chart examples of Enjin, COTI, and Aeon, he shows how 10‑20x leverage can quickly liquidate accounts during normal 20‑30% intraday swings, while low leverage or spot trading allows traders to ride large bullish moves without panic. He also discusses the psychological pitfalls of FOMO, constant monitoring, and over‑confidence, recommending traders to trade only when they have multiple technical confluences and to be patient during bull runs, holding up‑trend assets through dips. The video concludes with a motivational message that, in a bull market, anyone can profit by managing risk, staying disciplined, and giving trades time to work.
Chapters
What's up everybody, welcome back to The Art Of Crypto, the best place for you to learn crypto trading and crypto investing. Now I'm sure we all know this statistic that 95% of traders are losing traders, but have you ever wondered why? Well, I would say that it's not because the 95% do not have access to some magical indicator or some cheat strategy, but rather the 95% fail because they do not exercise proper risk management. Now, before you think this is a boring topic and click off this video, I promise you that this is going to be the most important video you will ever watch on my channel, and one that is going to guarantee that you will be ahead of 90% of the herd, period. So before we dive right into it, I'm just gonna tell you straight up, this video is going to have minimal editing, so feel free to simply listen to this. But I promise you, by the end of the video, you are going to have a very changed perspective on crypto, and this perspective is going to guarantee that you win in crypto no matter what. So if you're interested, let's dive right into it. Now, the reason I'm making this video is because honestly, I wished someone would have told me what I'm about to tell you now when I first started trading crypto, because then I wouldn't have made so many stupid mistakes. But if you're a beginner, or perhaps you have already lost money in crypto, that's okay. Just consider yourself lucky that you are finding this video now before you've done anything much worse than what you've already done. So Let's jump right into it, yeah? So I understand that every other trading YouTube channel will tell you to only risk 1 to 2% of your account in any singular trade, and that is true, you should be doing that. But I will also be the first one to tell you something else, which is to not over-leverage. Here's why. Because there are so many people in the crypto markets that absolutely do not know what the hell they're doing. The moment someone sees big green candles like On Bitcoin right now, in real time, it's breaking through an all-time high, and I guarantee you there are a lot of people FOMOing into this trade right now. You don't want to be them. Oftentimes what you see beginners in crypto do is the moment they see a big green candle, let's go, let's go, let's go. And if you see big red candles like over here, they get out, which is exactly the opposite of what you should be doing. You're supposed to buy low and sell high. Not do the opposite. So because the crypto markets are so emotional, it causes a lot of volatility inside the crypto markets. See, for example, the moment a whale dumps, a bunch of newbies on ridiculous amounts of leverage are gonna get liquidated, which causes a large amount of market sell orders to suddenly fill the market, which causes the price to dump even harder. And newbie traders will see that the price has dropped by 20% over the last couple of hours, And they'll exit as well, causing more selling. So why is this important to you? Simple. In crypto, 20 to 30% price swings in the same day is perfectly normal. Heck, even 10 to 20% price swings in the span of a few hours is— like, I'm just gonna go on to Enjin, for example. Watch here. I'm on the 1-hourly chart right now, and in the same hour, Enjin pumped by more than 20%. Imagine, imagine that you were on a short position And perhaps you were on 10x leverage, you would have got liquidated in the exact same hour. So here is the moral of the story. I know going on leverage is incredibly exciting. The prospect of making some quick big money is tempting, no matter who it is that is looking at that chart. But I will be the first one to tell you from experience that you should not fall into that trap. See, Just based on the Enjin Coin example, you can already see that the crypto market has the potential— in fact, it regularly does pump by like 100% in a day, 2 days, 3 days. So you don't even need leverage to get these kinds of gains. In fact, when you go on way too high leverage, you would oftentimes find yourself panicking and closing your position before it has moved in the direction where you were expecting it to move. So you would have got stopped out before the move even began. So just to give you an example of what I mean, I'm just going to give you like a real-time example. Let's just go to a random chart. Yeah, um, yeah, like Cody. Cody was hot. So yeah, this is, this is a good example right here. So if you look at this line here, price actually found support here at this line, at this zone rather. So It'd be safe to assume that price would continue to find support at this zone. So say you thought that price would have found support here. You see the 1-hour green dot form on Market Cipher, and so you would have gotten in, yeah, at the green dot formation. But see, in this same 1-hourly candle, the price would have actually went down about like 3% before finally coming back up. So imagine if you were on 10x, 20x leverage, which I know a lot of beginners are doing that. You would have seen -30%, -60% before the price even went in your favor. So here's what 2 advantages of not going on overly high leverage has for you. Number one, it reduces your stress. You're not gonna worry about, say, A 3x position, if it really did came down by 3, like 3%, you would have only been down like 10%. And even if it came all the way down here, say you didn't set a stop loss, if it came all the way down here, you'd only be down 36%. Contrary to say you were on 10x leverage, you would have got liquidated. See, COTI is still bullish. If you see on Market Cipher, momentum is shifting upwards, money flow is shifting into the green. We are about to form a double bottom here. So it's bullish, but if you were on overly high leverage, you would have got stopped out before it made its bullish move. So moral of the story, seriously, either just use spot or start with very low leverage. If you ever find yourself— here's, in fact, here's a pro tip. If you ever find yourself worrying too much about a trade, if you find that you'll keep looking at the charts constantly worrying that The price is gonna go the opposite direction, then you are very, very likely playing with too big of a position size, or you are overleveraging. So if you ever catch yourself feeling that way, I want you to seriously rethink your perspective. Go on low leverage. In crypto, things move by a few 10% and even 100% in a day. You don't need 10x leverage to get the kind of gains that you would be happy with. If I take the Enjin example, yeah, even on 5x leverage, that would have been 500% gains. You don't need to unnecessarily expose yourself to risk just so, just so you could, oh, get, get a couple hundred more dollars of profit, or— you get the point. Now, just to move on to the second reason why you should not go on high leverage, especially as a beginner. Is this. If you've watched this video up to this point so far, you might be thinking, hey, what about stop losses? Aren't you supposed to have a set risk-to-reward ratio and set entries, set stop losses, and set profit-taking targets for every trade? And yes, that is true. But here's what I want you to understand, is that in crypto right now, we are going through what is called a bull run, which means given enough time Everything will come back up. So just to illustrate this example, let's look at Aeon Bitcoin on the 4-hour chart. So usually in an uptrend, the 50 exponential moving average tends to hold quite strongly as support. So this white line here, that would be our 50 EMA. So perhaps you would have gotten in at here. The price— see, over here, price came down to retest the 50 moving average. And then it had a second retest, forming a double bottom. So you think, hey, we're going back into an uptrend. So you might have entered at the close of this candle and set your stop loss below the EMA. See, if you were on 10x leverage, which I know a lot of people who regularly play with 10x leverage, you just by setting your stop loss there, the price will have to come down by 7%, and you would have got stopped out with a 70% loss. Imagine if you don't have proper risk management, say you were a beginner, and you go in with half your account size. You would've lost 35% of your entire account in one single trade, just by going on high leverage. On the contrary, if you went on, say, 3x leverage, you could've rode this all the way down here, and you wouldn't have panicked at all. You would've still been able to ride this wave. So, it just, honestly, man, If you're new to trading, if you're new to crypto, just don't use high leverage. All right, here's what you can do instead. Go on spot, go on 2x leverage, 3x leverage, 5x at the maximum. Because like, say you were on spot or maybe 2x, from your point of entry, if it really came all the way down here, you would not be panicking at all. That's all you've lost. And unless you really, really, really need the money Say maybe you're looking at another coin that has the potential to pump like 50%, 100%, then sure, by all means, take the loss. But otherwise, we are in a crypto bull run. Everything goes up given time. So you don't need to sell at a loss if you don't need to. This is why, this is why so many people are interested in crypto right now, because it's so easy to make money right now. You could know nothing You could know next to nothing about trading. As long as you do not play with way too much leverage or overly large position sizes, you're gonna make money, period. You're gonna make money given enough time. So you, from, from this point, all you would have gone through is an— is a 20% dip, right? Sometimes in crypto, there is a saying that goes like, sometimes you have to be able to stomach the 30% drops to savor the 300% gains, as you can see here. So moral of the story, seriously, especially if you're new, don't go on overly high leverage, right? Because in a bull market, you're gonna make money no matter what. You just need to give it time. So don't go on overly high leverage. You're still gonna get 100%, 200%, 300% moves, but it would be such a shame if you got stopped out before you could even savor the Those gains. Does it make sense? So this brings me on to the next point, right? Which is as a beginner, you are going to lose. Now I don't want to be the party pooper here and tell you that you're not going to succeed in crypto because you will. Honestly, if you just persevere, you will succeed in crypto. But I'm saying that in the beginning, you are going to lose. You will lose a lot. You are going to jump into trades with fear of missing out. You are going to jump into trades that have no confluence of technical factors. You might just see the price at the middle of nowhere, and just because you see some news, or maybe just because you hear some YouTuber say, hey, this is gonna go to the moon, baby, and you get in, you would be very, very, you would be in a very bad position. Let's just say that. So, as a beginner, you will lose in the beginning. So, please, in fact, if you can do this, it'd be even better, which is just start off really, really small. Maybe just play with $10 or $100. Right, and practice that 1% to 2% risk management rule because small gains tend to compound over time. Now I'm sure you've heard the saying that 306— 1% every day for a year is equal to 37x your money. So if you could just get 1% of your account every day, that'd be 37x by the end of the year. So you don't need to aim, you don't need to shoot for these 100-200% moves in order to make money in crypto. Simply by making small gains every day, you'd be highly, highly successful in crypto. So please, as a beginner, please start small and don't go on high leverage because honestly, you're gonna get wrecked. If I knew this when I was a beginner, honestly, I wouldn't have lost like up to 70% of my account at one point. Right now I've recovered, but I wouldn't have had to sit through that. And now this is for everyone who is going to be trading the setups that I'll be posting in the future. If whatever setups I give you, I hope that you do a little bit of your own analysis. Wait for the perfect entry. You don't wanna enter without confluence from multiple factors. And most importantly, when I give you trading setups, it doesn't necessarily mean that it will blow up by 50 to 100%. Sometimes it does, but sometimes it doesn't. Sometimes it drops by 20% before moving in the direction that I predicted. You have to be able to Again, just, you have to be able to stomach the 20-30% drops in order to reap the 200-300% moves. So if you're watching this, right, if you're trading my setups, or before you even trade my setups, remember, start small. Don't go on overly high leverage because that's just gonna get you wrecked. Maybe when you get experienced, maybe when you have multiple wins under your belt, then yeah, you can go on higher leverage, but Nevertheless, things don't usually play out immediately whenever I post them, so just give it a bit of time. And with time, you're gonna have to stomach some dips. So just honestly, if you take anything away from this video— I know it's been very ranty, I know it's been long, but honestly, this is not much editing. It's mostly just coming from the heart. I wish people know this. I wish people would watch this to the end. And if you did, Thank you very much, because now you are— now you've gained so much more. But anyways, if there's one thing that you take away from this video, it's just we're in a bull market right now. Anyone can make money, even a pig, even a dog, even your rabbit. So don't take a loss if you don't need to. Obviously, if you need the money, if you have other things that you're looking at, then sure, take the loss. But otherwise, no, just hold. Just hodl, right? Just hodl. It's gonna come back up in time. And this only applies if the coin that you're looking at, or whichever coin that is, is bullish, right? If it's in a downtrend, then no, don't hold. Don't hold the coin through a downtrend. But if it's in an uptrend like Aeon right now, this small little dip, this small 30% dip, is nothing much. Honestly, it's nothing much because we're still in an uptrend, right? In fact, buy more here. Buy the dips. You're gonna make money eventually, right? So give it time. Don't go on overly high leverage. And yeah, may the gains be with you. Peace.
