Financial markets in red: global drop in currencies and assets
In recent days, a significant decline has been observed in global financial markets. The US dollar has weakened considerably against other major currencies, reaching levels not seen in years, amid economic uncertainty and monetary and geopolitical policies that undermine investor confidence.
At the same time, risk assets such as cryptocurrencies experienced sharp declines: Bitcoin has fallen below US$90,000, while other cryptos like Ether and Solana recorded drops of up to around 10% in a single session.
These types of market movements not only affect the value of currencies and assets but also the accounts of many traders.
Why do many traders lose money when "everything falls"?
A large part of the losses suffered by traders during these declines is not solely due to market movement but to the failure to use basic risk management tools, especially the stop-loss.
-Stop-loss is an order that automatically closes a position when the price reaches a predetermined loss level.
-Without a stop-loss, a rapid drop can drag a position for much longer and empty an account much more quickly, especially if trading with leverage (which amplifies both gains and losses).
- Key lesson: In volatile markets, like the current ones, using stop-loss and managing risk with discipline is not optional: it is essential. It is also important to adjust the size of positions and not to trade with more than one can afford to lose.
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