Crypto trading involves trading bitcoins in various forms, i.e., buying and selling of bitcoins in several currencies. However, the crypto trading business is very dynamic and involves a lot of variance between 5-15%. Also, it’s mainly controlled by a few big players in the market, and there can be few websites involved in crypto trading which can be a complete scam. So crypto trading is considereda very risky process.
However, there are also a few tips and tricks on https://freebitco.in to reduce this risk while trading bitcoins. Let us have a look at those:
You should follow a proper risk management strategy while trading bitcoins.
Few of them are:
- Avoid Counterparty Risk:
There is a lot of counterparty risk associated with cryptocurrency trading. Although the trading assures high gains, we should not overlook the problems that come with the bitcoin exchanges. The biggest risk in bitcoin exchange is that the transaction is irreversible and so, once you exchange the currency for bitcoin or vice versa with your private key, then it can be a big gamble. There are also chances that your transaction might get hacked, and you may lose your money.
These precautions must be taken to avoid counter party risk:
- Do not leave your bitcoins on an exchange if you’re not trading it actively.
- You must not utilize your portfolio until 100%, trade with 20-30% only.
- Don’t exchange all your coins in your transaction, diversify it.
- Before the transaction, research about the website where you’re doing the exchange.
- Do not focus on Quantity but on Quality of the trade:
The best strategy for effective crypto trading is to choose quality rather than quantity. You can choose the strategy known as swing trading during strong trends of the market. You can choose to do automated scaling if the markets are stable. So choose the trading style wisely as per the market conditions
- Make sure to have an exit strategy:
You need to keep track of the details and statistics on the charts and plan your trade beforehand. In addition, you must analyze how much risk you can take and set targets accordingly. During strong trends, you can choose to add to your position or lock in the profits. If you feel the market is going against you, then set stop orders on the trade. An effective strategy always helps.
- Excessive leverage can be dangerous:
Using leverage can cause a lot of loss during forced liquidation. Even your principle amount might get lost in this scenario. You must give your investment enough time to breathe. Some exchanges may offer 100 times leverage but then if the market goes 1% against you then you’re completely lost in your trade.
- Do not create Hype:
Do not keep fear inside you while trading. Also, you must play calmly and not become too greedy. Be patient and wisely do trading and exchanges. Do not follow your emotions or six sense, not even market hypes.
Take note of these strategies, and you will surely trade much better.