> ## Documentation Index > Fetch the complete documentation index at: https://docs.metengine.xyz/llms.txt > Use this file to discover all available pages before exploring further. # Protect Your Capital > Risk management strategies that keep you profitable long-term # Protect Your Capital You don't want to just chase APYs. You also want to protect your downside. Here's how you can trade confidently without putting your capital at unnecessary risk. ## What You'll Learn * How to avoid common pitfalls that wipe out profits * Key risks and how to manage them * Exit strategies that lock in gains ## Best Practices ### 1. Make Data-Driven Decisions Base your pool selection on onchain data, not hype. Telegram groups and Discord calls are noise. Real alpha comes from actual trading activity. ### 2. Stay Near the Action Position your liquidity ranges close to current prices. Liquidity that's too far from the action doesn't earn fees. ### 3. Monitor Continuously Use real-time analytics and PnL tracking. Know your true profit at all times, not just paper gains. ### 4. Have an Exit Plan Before entering any position, know: * When you'll reduce exposure * When you'll exit entirely * Your maximum acceptable loss ### 5. Protect Your Transactions Use MEV-protected transactions and low-slippage platforms. Every bit of slippage eats into your profits. ### 6. Understand the Math Learn how fees, impermanent loss, and liquidity curves work. Knowledge is your best defense. ### 7. Start Small Begin with smaller positions to understand the dynamics before scaling. There's no rush. The pools will still be there. ## Key Risks to Manage ### Impermanent Loss When the price ratio of your pooled assets changes, you experience impermanent loss. This is the primary risk in market making. **How to manage it:** * Monitor impermanent loss in real-time (MetEngine calculates this for you) * Compare fees earned vs. loss incurred * Exit when loss exceeds fees ### Liquidity Risk Sometimes you may not be able to exit a position when you need to. **How to manage it:** * Avoid pools with very low volume & low organic score * Ensure sufficient market liquidity exists * Maintain exit flexibility by not overconcentrating ## Exit Strategy Framework Your disciplined exits will separate you from those who give back their gains. **Set clear rules:** * Define your target profit level * Define your maximum acceptable loss * Stick to your parameters. Don't let emotions drive your decisions **Know when to exit:** * When impermanent loss exceeds fees for extended periods * During extreme market conditions * When volume drops significantly ## You're Now Ready To Understanding risk management is the foundation of profitable market making. Now you can start trading with confidence. Create your account and fund your wallet Learn to spot high-earning opportunities