In this instructional video, The Art of Crypto explains why crypto trading is essentially gambling and how disciplined risk management separates successful traders from losers. He defines risk management as the tool that limits downside while allowing upside potential, and advocates a strict position‑size rule: risk only 1% of your account per trade (up to 2–3% for advanced traders). He stresses the necessity of stop‑loss orders, explains that traders should enter a trade expecting it might lose, and shows how this mindset reduces large drawdowns. The presenter walks through the math of losing multiple trades in a row, illustrating how small per‑trade risk keeps losses recoverable, whereas larger risk percentages can wipe out a portfolio quickly. He also ties the strategy to crypto’s extreme volatility, arguing that rapid price swings make tight risk control even more critical. The video ends with a call to action to subscribe, watch a related swing‑trading video, and a reminder that avoiding loss puts you ahead of 90% of market participants.
Chapters
Now, all trading is, is essentially glorified gambling in its purest form. And the only thing that really separates trading from gambling is 2 very simple but magic words. And in today's video, I'm going to teach you how to optimize your risk management strategy in order to maximize the gains while minimizing the losses. If that sounds like fun to you, drop a like on the video. And without any further ado, let's dive right into it. So firstly, let's define risk Risk management. So in trading, everybody loses, no matter who you are, no matter how good you are. Even though you are a market maker, you will still lose. And risk management, it is simply the ingredient that allows you to not lose too much when you do lose. Because we all know someone who has lost 10, 20, 40, 50% of their account in one trade before. And heck, I am sure everyone here knows of somebody who has lost their entire account in a single trade before. And If you've been there, you don't wanna be at that position. And that's what risk management serves to do. It protects yourself from downside risk while if you optimize it properly, you are going to be able to maximize your upside reward. So this leads me to tip number 1, which is you should at most, at most be only losing about 2% of your account per trade. Now, when I say lose, you should only lose up to 2% of your account in every losing trade. Maximally, the most that I would be able to accept is 3%. 3%. And let's define that. So when I say you should only lose about 1 to 3% of your account in every trade, it means that if your trade hits your stop loss— and to everyone here that does not use a stop loss, you should be using a stop loss because it will protect you again from downside risk. And if you don't have a stop loss, then there is something very fundamentally wrong with your trading strategy. It means that you are not prepared heading into the trade. You have no clue where your invalidation point is. And in the words of somebody famous, if you fail to prepare, you prepare to fail. And that cannot be more true in the crypto markets because things move so, so quickly. At the same time, everything can just go to zero in the blink of an eye. So if your trade hits your stop loss, you should only lose about 1% of your account. Now let's stick with 1% there. So assuming you have a $10,000 account, so even though your stop loss is like 5% or 10%, as long as that stop loss gets hit, You should only lose $100 in your account. And this is why you hear so much talk about risk-to-reward ratio, because at the end of the day, the thing that matters is not the dollar amount that you have made, is how much of a reward you got in return for the amount that you risked. And this leads me onto my second tip, which is the fact that most people who lose large sums of their account in one trade, or maybe they lose their entire account in a single trade, the biggest mistake that they're doing is they are going into the trade with the expectation that the trade is going to go in their favor. And I'm sure we have all been there before. We see some crypto influencer post about this coin that is, you know, this entry, this stop loss, you know, it's going to go to the moon, it's going to go do a 10x, it's going to do like 100x. And we just pump in all of our money and we look forward when the target gets hit. Oh my God, you know, I'm going to make $10,000 if the target gets hit. That is the mindset that 90% of losing traders approach their trading, which is they go into the trade expecting that they will win without thinking of the downside risk. And so if the trade does go against their favor, I'm sure we all know what's going to happen next. So this simple mindset shift is going to save you so much money because now you go from losing 10% to 50% of your account in one trade to only losing about 1 to 3% of your trade. Because when you open a trade, you're expecting it to lose When you make this simple shift, it actually saves you so much money in the long run. And as a bonus, it is going to help you stick to your risk management plan much better. If you are expecting yourself to lose when you enter a trade, then it becomes much more easier to, oh my God, you know, I'm entering this trade, there is a risk that I could lose this money. So let me be strict with my risk management rules and let me stick to 1%. Now you might be wondering, why is this so important? If I'm risking only 1% of my account in every trade, aren't I going to make money really slowly? Well, yes, and that's sort of how the markets work. You're not supposed to make money quick. Like, in crypto, you have gigantic moves, right? Coins move 2, 3, 4, 5x in the same day sometimes. And in fact, I will argue that it is because of this fact that crypto moves so much in a single day that it is even more important for you to practice solid risk management. Because here's the thing, anything that is able to move up really quick Has the potential to move down really quick as well. Assuming you're in a long, then that is going to really destroy your account. So with crypto, you're already making money so quickly, so the upside potential is huge. Do that, and I guarantee you're going to live to tell the tale of how you ten hundred x your account in the last year or two years or something. And just remember, it is not the dollar amount that you make, but it is the r value that you are making, which is essentially. The amount of reward that you're making for every bit of risk that you're taking on. That's the true measure of a good or excellent or exceptional trade. So we've already talked about how to minimize your downside risk using solid, proper risk management. And if you're not sure exactly which risk management plan that you should be following, should you be going with 1%, 2%, or maybe 3%, then my suggestion to everybody, 99% of the people watching this video should only practice 1% account risk per trade until you get advanced enough, until you have developed a strategy good enough that it ensures profitability over a long run. Then you start upping your risk to 2%, maybe even 3%. But to 99% of you, stick to 1%. Because here's the thing, even the most successful traders in the world go through drawdowns of like 10 losses in a row. Maybe even 7 losses. And that is very common in the world of trading. Sometimes your mentality gets a little bit messed up, sometimes you just go through a losing streak, sometimes maybe your strategy just doesn't really hold up to the current market conditions. And that can last for quite a bit. And when that happens, you're going to lose a very large part of your account if you're risking more than 1% of your account per trade. Now, the more experience you get, the lower the risk of your account going through such a massive drawdown of multiple losses in a row. So until you get to that point, stick to 1%, because even if you lose 10%, like 10 trades in a row, even if you lose 10 trades in a row, 15 trades in a row, 20 trades in a row, that's only going to be about 10 to 20% of your account lost. And it's really easy to recover that. Whereas if, let's say, you were risking about 3% of your account per trade, After 10 losses, you're gonna lose 30% of your account straight up. And imagine if you lost 20 trades, that's 60% of your account gone just like that. And you need to understand that losses compound. When you lose 10% of your account, you only really need about 11% gain to get back to your previous point. But if you lost 50% of your account, you're gonna need 100% gains. That's right, you need to double your account in order to get back just to where you started. So I hope this reason alone convinces you to practice this 1% risk management strategy. It is honestly the strategy that I've been using for the longest period of time, and I'm fairly experienced at this. And I'm sure many, many other traders would say the same thing to you. 1% risk management just protects your account from downside risk. At the end of the day, it is much more important if you wanna survive in these markets and continue to make money. Just remember this little saying, 90% of the market are losing traders. means they either blown up their account or they are consistently losing money on every trade. 5% of the market is about break-even, and the remaining 5% of the market are winning traders. That means that as long as you do not lose your money, as long as you do not lose money, you are already ahead of 90% of the market. That is a really powerful statement. And in the next video, we're going to talk about how to optimize your risk management strategy in order to maximize Your returns. So if you're interested in that video, make sure you subscribe and drop a like on this video. Share it to a friend if you think this might help them. And in the meantime, if you want to check out a video on how to make 50% to 100% returns on your account every single month using a simple swing trading strategy, then you're going to want to check out this video that I'm going to have linked on the end page. For now, may the gains be with you, my friends. Bye-bye.
