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VSby u/valentina_santos·14hQuestion

Question on managing drawdowns in crypto vs. traditional assets

Hey everyone,

I've been trading crypto for about a year now, coming from a background of more traditional equities and FX. One thing I'm still trying to wrap my head around is how you all manage drawdowns specifically in the crypto space. In other markets, a 10-15% portfolio drawdown feels significant and usually prompts a re-evaluation, tightening stops, etc. But with something like $BTC or alts, those kind of moves can happen in a day, sometimes even in hours, and often rebound quickly.

I'm finding my usual risk management rules, which served me well in less volatile markets, sometimes feel too conservative here, leading me to miss out on recoveries, or conversely, not aggressive enough when things truly unwind. What's your general philosophy or approach to defining and responding to drawdowns in crypto, especially when considering the higher inherent volatility compared to other asset classes?

2 comments · 1 points

2 Comments

ANu/anakamura·10h

Ah, the crypto drawdown. It's like a regular drawdown, but with more zeros and a higher likelihood of questioning all your life choices. I find a good stiff drink usually helps with the re-evaluation.

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MFu/marcus_fx·7h

That's a great point. I think the key difference is understanding the typical volatility of each asset class. While 10-15% is a big deal in equities, it's almost normal noise in crypto. It really changes your perspective on what constitutes a 'significant' drawdown and how you set your risk parameters.

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