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The most important things when you manage risk are:
- Defining your portfolio size
- Defining your risk appetite
- Portfolio allocation
- Entering and exiting positions
- Managing your emotions
Defining your portfolio size
This is going to vary from individual to individual. Think about how much money you’re ready to lose. There’s no getting around it. Crypto is risky.
I wouldn’t advise spending your life savings on crypto. Assess how much money you have and use regularly. You don’t want to become illiquid or lose money you can’t afford to. I suggest starting out small, and gradually increasing your portfolio size. This allows you to learn as you go. I started out in 2018, and started out by investing $500 in Bitcoin.
Defining your risk appetite
Crypto is volatile. You have to be somewhat distant from extremely risky investments. You have to be able to stomach ups and downs. A lot of people can’t handle 30% dips in their portfolio. If this is you, altcoins might not be the best investment. You’re probably better off investing in blue chips, or using DeFi protocols like LPs or @anchor_protocol.
