Bitcoin trading is one of the hot topics these days, despite being extremely volatile. many financial investors believe it is just about investing in the crypto market and making huge profits with an automation system. However, the scenario is not like the same in reality. such as this platform.
Of course, there are chance of you winning a great deal. Therefore, there also stands the chance of losing your money big time as well. All the traders take the risks and they have to.
However, there are some of the tips to avoid trading risks in Bitcoin. Read on to know further.
- Counterparty risk protection
Crypto market is one of those that hold the potential of giving back great profits. They still have their share of problems though. The problems include the counterparty risk of the exchanges. if you are trading in crypto, you must have been in one of the exchanges. So, we hardly recommend not to share your private key with your trusted exchange. There are multiple examples of exchanges being hacked; many people lost their money this way. Here are the rules to follow:
- If you are not trading on the current moment actively, try not to keep the coins on the exchange.
- The amount you have in your portfolio, only use 20 percent to 30 percent of the it.
- Diversity is the key.
- While choosing an exchange, make sure that it is highly reputed one.
- Avoid Hype
The FOMO is taking the world in its grip. It is the Fear Of Missing Out. It has reached the trading market as well. However, you must know that this fear will do no good to a trader. Watching others and being greedy will only make you buy more tops than you need. In such a situation, people start panicking later investing such big amounts. Being afraid will just lessen your chance of profiting as close to zero. So, you know, the fear management will do half the work.
And needless to say, do not invest in the bitcoin trading if you are just doing it for the sake of being fit in a group or something. In this way, you will feel devastated.
- An Exit strategy is must
While on an exchange, try to find the supporting factors as well as the resistance ones. You need to determine The amount of risk you can afford to bear at last. Try to use the stop order for yourself. This will help you safeguard your invested amounts when the market becomes extremely volatile. However, remember that in case of high fluctuation of the market, this will not come useful because of the slippage.
- Do extensive research
Whatever you do in life, first research, then understand and finally act. It is not different in case of crypto trading though. Doing proper research will ensure you get to know the most about the crypto investment market.
- Understand how much money you can afford to invest
Never ever invest your lifesavings in the bitcoin market as the price is always fluctuating. Therefore, determine how much you could afford to invest and lose if situation arrives. Keeping the risk factors in mind will only help you take better decisions.
- Keep a check on quality
There are traders who does not understand the market and keeps on doing wrong trading. While trading in bitcoin, you need to make sure whether the quality and decisions are right or not. Not every trading type is is the same and depending on the market fluctuation, you have to choose a trading type that works for you. For example, if the market seems stable, you can try automated scalping. On the other hand, when the trends are going steady, it is the swing trade that will go best with it.
- Understand the market
When you are into trading with bitcoin or cryptos, you need to keep on evaluating in the direction the market goes. You must be able to assume the pulse of the market and its mood as well.
So, these were some of the risk reducing factors while you want to invest in crypto. Apart from that, if you need an exchange that have lesser risks and trustworthy, try Bitcoin Era.