Module 05 — Risk Management and Psychology ⭐¶

THE most important module of the course. Analysis tells you what and when; risk management decides whether you survive being wrong — and you're going to be wrong many times. Every trader who lasts years at this is, above all, a risk manager.

🔊 Listen to this module (Spanish audio, 12 min 03 s)

Narrated version of the full module — perfect for reviewing while you do something else.

1. The math you have to internalize¶

Losses are asymmetric:

You lose	You need to gain to recover
10%	11%
25%	33%
50%	100%
80%	400%
90%	900%

Takeaway: priority #1 is not to win big, it's to not lose big. A -50% forces you to double your account just to get back to where you started.

2. Position sizing: the 1-2% rule¶

Never risk more than 1-2% of your total capital on a single trade. "Risk" = what you lose if the stop-loss triggers, NOT the size of the position.

Capital: 5,000 €  |  Risk per trade: 1% = 50 €
BTC entry: 50,000 €  |  Stop-loss: 47,500 € (−5%)

Position size = risk / distance to stop
              = 50 € / 5% = 1,000 €

A 1,000 € position (20% of capital) but a real risk of 50 € (1%). With this rule, you'd need ~50 losing trades IN A ROW to lose half your account. Without it, two mistakes with everything on the line take you out of the game.

3. Stop-loss: non-negotiable¶

It's defined BEFORE you enter, at the level where your thesis is invalidated (module 4), not at "what would hurt to lose."
If you don't know where the stop goes, you don't know why you're entering → don't enter.
Never move a stop against you ("I'll give it a little more room…"). That's how 50 € losses turn into 1,000 € losses.
In crypto, stops get hunted (module 4): place them beyond the obvious zones, and size your position accordingly.

4. Risk/reward ratio (R:R)¶

Only take trades where what you expect to gain ≥ 2× what you risk (R:R ≥ 2:1).

With R:R 2:1, winning only 40% of the time you're still profitable: (0.40 × 2R) − (0.60 × 1R) = +0.2R per trade

This frees you from needing to "always be right" — the game is about mathematical expectancy, not about being right.

4.5 Leverage and liquidation: risk hole #1¶

Leverage lets you open a position bigger than your money: with 100 € and "10x" you control 1,000 €. It sounds like a shortcut to quick gains. It's the shortest road to losing everything.

What 10x really means

With 10x, a price move of just −10% against you liquidates your entire position: the exchange force-closes it and your money vanishes. It does NOT "recover if it goes back up" — you no longer have a position. Crypto moves −10% on a normal day. With 20x, −5% is enough. With 50x, −2%.

Leverage	Drop that liquidates you	Realistic in crypto?
2x	−50%	Rare within hours
5x	−20%	Possible on bad days
10x	−10%	Happens almost every week
20x	−5%	Happens every day
50x+	−2%	Happens every hour

Rule for beginners: leverage = 1x (none). Period. Leverage is not for winning faster; it's an advanced hedging tool that ruins 90% of those who touch it without mastering it. First survive a year without it. If you ever use it, never above 2-3x and always with a stop-loss (section 3).

5. Portfolio construction (investing, not trading)¶

For the long-term investing portion:

Core (60-80%): BTC and ETH. The most proven, what survives the bears.
Satellite (20-30%): 3-5 large projects you've analyzed using module 3.
Speculative (0-10%): what you're willing to lose 100%.
Never all-in on an altcoin. Ever. Altcoins fall 90-95% in bear markets and many never come back.

DCA (Dollar Cost Averaging)¶

Buy a fixed amount every week/month, regardless of price. It removes timing and emotion. For a beginner, DCA into BTC/ETH historically beats most attempts at active trading. Seriously: this single line is probably worth more than all of module 4.

Taking profits¶

A plan written BEFORE the euphoria: e.g. "I sell 20% of the satellite if it 3x's, another 20% at 5x." At the bull market top, nobody sells because "it's going to keep going up." Then comes the -80%.

6. Psychology: your worst enemy is you¶

Bias	How it sabotages you	Antidote
FOMO	You buy after a +40% because "it's getting away"	If it already moved, you're already late. There's always another trade
Loss aversion	You don't close a losing position "until it recovers"	The stop decides, not you
Revenge trading	After a loss, you double down to "win it back"	A loss = close the platform until tomorrow
Confirmation bias	You only read what supports your position	Actively seek out the opposite thesis
Overconfidence	5 good trades in a bull market = "I'm a genius"	In a bull market everything goes up; you're not the genius, the tide is
Sunk cost	"I already lost 60%, what's the point of selling now"	The only thing that matters: would you buy TODAY at this price?

Personal protection rules¶

Mandatory trading journal: every trade with date, reason for entry, stop, target, result, and what you felt. Re-reading it monthly teaches more than any course.
After 3 losses in a row: a 48h break minimum.
Investment decisions: never in the middle of the night, never after a bad day, never drunk on Twitter euphoria.
Total amount invested: if it keeps you up at night, it's too much. Reduce it until you sleep well.

Exercises¶

Calculate the position size for: capital 3,000 €, risk 1%, ETH entry 3,000 €, stop 2,760 €. (Solution: risk 30 €; distance 8%; position = 375 €.)
Create your journal template in notas/diario-trading.md with the columns from point 6.1.
Write YOUR risk plan in notas/plan-de-riesgo.md: % per trade, minimum R:R, portfolio distribution, profit-taking rules, break rules. Sign it. It's your contract with yourself.
Mental backtest: look at the chart of any top-10 altcoin from 2021 (LUNA, for example). Calculate what happened to an "all-in" at the peak. LUNA was top-10 and went to ZERO in May 2022. Internalize that.

Checkpoint ✅¶

If you lose 50%, what % do you need to gain to recover? What does that imply for your priorities?
What's the difference between position size and risk per trade?
With R:R 2:1 and a 45% win rate, are you profitable? Do the math.
Why does DCA into BTC/ETH usually beat a beginner's active trading?
What are YOUR three most likely biases and what written rule protects you from each one?
With 10x leverage, what price drop liquidates your position? What leverage level should a beginner use?

→ Next: Module 06 — DeFi and yields