Here’s Day 6 written clearly and practically, focusing on risk management, one of the most important skills every crypto trader must learn.

Day 6 – Risk Management Basics



Great work identifying market trends on Day 5! Now it’s time to talk about something just as important – risk management.

Crypto markets are exciting but also volatile. Prices can rise and fall quickly, sometimes within minutes. Without a proper plan, it’s easy to lose money fast.

Risk management helps you control how much you invest and how much you’re willing to lose. Even the best traders use it.

🔹 What is Risk Management?

Risk management means planning your trades so that you don’t lose more than you can afford.

It’s like wearing a seatbelt before driving – it won’t stop accidents, but it helps you stay safe when things go wrong.

🔹 Key Principles of Risk Management

  1. Never invest more than you can afford to lose
    Only use money that you don’t need for daily expenses or emergency savings.

  2. Diversify your investments
    Don’t put all your money into one coin. Spread it across different cryptocurrencies.

  3. Set stop-loss orders
    A stop-loss automatically sells your crypto when the price drops to a certain level. It prevents bigger losses.

  4. Take profits at the right time
    Don’t wait too long in hopes of more gains. Set target prices to sell and secure profits.

  5. Control emotional trading
    Avoid panic selling or FOMO (Fear of Missing Out). Stick to your plan.

🔹 Example of Risk Management

Let’s say Priya has ₹50,000 to trade.

✔ She decides only to risk 10% of it in a single trade → ₹5,000
✔ She buys Cardano (ADA) at ₹100 and sets a stop-loss at ₹90.
✔ If the price drops to ₹90, her position is automatically sold, and she only loses ₹1,000 instead of ₹5,000.

By planning ahead, she avoids panic and limits her loss.

🔹 Why It’s Important

  • Prevents emotional decisions.

  • Helps you stay in the game long-term.

  • Protects your capital, allowing you to trade again tomorrow.

🔹 Real-Life Scenario

Ramesh sees a coin rising fast and wants to invest ₹1,00,000 all at once. But instead, he only invests ₹10,000 in one trade and keeps the rest for future opportunities.
This way, even if the market suddenly drops, he still has funds to recover and make smarter trades later.

✅ Day 6 Task

  1. Write how much money you’re comfortable investing without affecting your daily life.

  2. Choose a percentage of that money you are willing to risk in one trade (start small, like 5% or 10%).

  3. Practice setting a stop-loss order in your exchange for a sample trade.

  4. Write a short note explaining how you’ll control emotions while trading.

Tomorrow, Day 7, we’ll begin learning how to read crypto charts, starting with understanding candlesticks – the most important tool for traders.