Risk management is among the most significant components to successful cryptocurrency trading . No matter how great you think your commerce setup is, nothing is guaranteed. Every dealer requires a hit from time to time but using a successful risk management plan is what is going to keep you in the game for a very long haul, particularly if trading bitcoin.
Here are five ways you can lower your risk vulnerability when trading bitcoin:
#1: Shield yourself from Counterparty Risk
Even though the cryptocurrency markets possess a number of the highest percentage profits, they nevertheless have their problems and exchanges arrive with a level of counterparty risk. Bitcoin trades are irreversible and expecting that an exchange along with your personal keys could be catastrophic. There is a very long list of all crypto exchanges becoming hacked and losing cash.
• As crypto dealers we cannot fully eliminate counterparty risk but we could take steps to greatly reduce it.
• Do not leave coins on a market when not knowingly trading
• Simply trade with 20-30 percent of your portfolio
• Diversify your coins among several exchanges
Find out more about the market to be certain it’s a good reputation.
#2: Trade Quality over Quantity
Dealers who trade the markets have a tendency to waste the most time and cash. The trick to successful cryptocurrency trading is to pick quality over quantity. Not every kind of market condition will be conducive to a strategy. Swing trading functions best during powerful tendencies, whereas automated trading will become more effective when the markets are steady.