What is Risk management?
Deciding in advance how much can be lost, and structuring positions so that no single outcome is ruinous.
The core insight is asymmetric: a 50% loss requires a 100% gain to recover. Avoiding large losses matters more than capturing large gains.
For a volatile asset the practical version is unglamorous — size positions so that a severe drawdown is survivable, both financially and psychologically.
Related terms
Position sizing
Deciding how much to commit to a position based on how much you are prepared to lose if it goes against you.
MarchésDrawdown
The decline from a peak to a subsequent trough, usually expressed as a percentage.
MarchésVolatility
The magnitude of price variation over time. Bitcoin's is high by the standards of every traditional asset…
This definition is part of the Bitcoin Logical glossary. For the fuller explanation, start with Apprendre, or see the live numbers on Le Signal Bitcoin.