Crypto Academy / Season 3 / Week 8 - Homework Post for Professor @yohan2on

This is the eighth week of the Crypto Academy season 3 and I am thrilled to take part in this week's task by Respected Professor @yohan2on on Risk Management in Trading.

Define the following Trading terminologies;

• Buy stop

• Sell stop

• Buy limit

• Sell limit

• Trailing stop loss

• Margin call

BUY STOP

Buy stop is a stopping point in easy words, if you want to buy any currency in a market or you want to buy any crypto-asset at a specific price. You can use buy stop here mostly we use buy stop when the price touch the support zone then we select the specific price when that coin or that currency touch that price the order will automatically create and by doing this thing you can get a reasonable profit. Suppose the supporting zone of any coin is 80$ and the resistance zone is 120$ now you can use buy stop here and you will add Limit here like you want to buy this coin at 85$ when the price will reach 85$ your order will automatically create and you will get that coin on that price which you want.

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SELL STOP

Sell stop is a stopping point when the price of any crypto asset reached that point where you want to sell your currency or asset your asset will sell automatically on that point. sell stop is mostly used near the resistance zone you select the price and select the limit of how many coins you want to sell.

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BUY LIMIT

It is the third point basically when we read the word buy limit a word comes to our mind a limit for buying something. if you want to buy any crypto-asset at a very specific price then you will select the buy limit and when the price reached that level your order will create and automatically you will buy that asset.

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SELL LIMIT

Select limit is a point where we sell our crypto assets at a specific price. we simply select the limit of that coin and select the specific price where we want to sell our currency and when the market price reached that point our currency will sell automatically.

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TRAILING STOP LOSS

trailing stop loss is a moving stop loss. it will shift when the trade will be in your favor. the benefit of stop loss is if you are in a profit stage in any trade or any condition and you are still waiting for more profit it will help you to stop doing that otherwise you will be at a loss.

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MARGIN CALL

Basically margin call is a call by broker to trader. A trader has not a sufficient amount for trade at this time broker gives us the power means money for trade. trader fix an amount as a margin and trade with it. a margin call can give by a broker to the trader if the trader has not sufficient amount in his account broker inform him when his account reached the lowest level.

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Q/2 Practically demonstrate your understanding of Risk management in Trading.

RISK MANAGEMENT

Risk management is such an important factor in trading. it help the traders to make rules and regulations for their investments, it helps traders to not losing all their money. this thing help traders where they need to use stop loss and where they need to make a profit.

PORTFOLIO MANAGEMENT

it's very important management in the world of crypto. if you want to invest your money in any crypto asset try not to invest all your money in one coin. try to invest money in more coins first you need to search about the coins where you are investing and then invest in more than one coin. suppose if you invest all your money in one and that fall down it means your all the money falls down but if you invest in more than one coin now you have a chance to get profit from another coin.

RISK REWARD RATIO

the risk-reward ratio is an important factor it means you set your reward ratio what you want like 1/2 1/3 1/4 now it's up to you what you want. here I highly suggest beginners don't use 1/3 because if you don't have the experience you will lose your money. if we talk about 1/3 risk-reward ratio, Suppose if the price of any coin is 200$ and you set stop loss 180$ so your profit will be 360$.

CONCLUSION

Thank you so much professor for this amazing lecture by this lecture i learned a lot. If you know where you need to use buy stop, Sell Stop buy limit sell limit etc you can get profit by understanding these signals and if you want to invest money in any coin remember never inverst you full money in one coin try to invest in more coins.