How to avoid risks in cryptocurrency trading?
The thing about cryptocurrency is that you have to know how to manage your assets. In this short guide, we will discuss the main points.
1. Analysis (DYOR, do your own research)
- The choice of cryptocurrency: knowing and understanding the project, its tokenomics, future prospects.
- The choice of cryptocurrency storage method: type of wallet, password reliability, hardware security, two-factor authentication, offline storage.
- The choice of exchange: centralized or decentralized, audits from reputable sources, hacking protection mechanisms and liquidity.
2. Trading plan
Volatile cryptocurrency markets oblige you to have your own trading plan and strategy of action (leverage and placement of stop loss and take profit orders).
3. Capital management
- Capital limitation strategy (max 5% of total account value per trade)
- Using moderate leverage is only suitable for experienced players
- Calculation of risk/profit ratio (e.g. 1/2)
4. Psychology and discipline
Beginners often find themselves unable to control emotions such as greed, fear and excitement.
5. The golden rule
Invest only what you can afford to lose.
