Bitcoin is the most valuable and oldest cryptocurrency trading in the industry. Over the years, it has witnessed incredible swings from low to high and high to low. Still, it remains the most valuable of all cryptocurrencies. Even with the price fluctuations, the overall trend is upwards. However, you need to protect your investment while trading Bitcoins.
How to Minimize Risks When Trading Bitcoins
1. Trade on Reliable Exchange
Not every exchange out there is reliable. Most of them are prone to hacking. If you don’t choose the right exchange, you’ll be exposing yourself to more risks.
2. Commit Only 1% of Your Capital Per Trade
It might be tempting to commit a lot to a single trade that looks promising. Try to avoid that temptation. Even when you feel certain that the process will move upward, don’t take the risk of using more than 1% on a single trade. This is because a losing streak can happen in ten or more consecutive trades. So, if you put more than 1% and a losing streak starts, you may end up losing a lot.
3. Give Yourself a Stop-loss
You don’t have control of how much you buy your Bitcoins. You can purchase in the morning, and the price will change in the evening. However, you can control your closing price. Decide what price will be your stop-loss price before you start any trade. Do not override your stop-loss. Stick to it no matter what. It takes discipline, but it’s worth it.
4.Set a Profit Withdrawal Level
The goal of cryptocurrency trading is to make a profit. You need to make your mind up about when you like to claim your profit. Also, as soon as you get to that level, take the profit and close the trade. Even if you see the trend is picking up again, try not to rejoin after you have closed the trade.
These are the four most important tips for minimizing risks during cryptocurrency trading.
Level : Basic