As an avid crypto trader, I’ve learned the hard way the risks of crypto trading and how to protect my investment. Crypto trading is a profitable endeavour, but it’s not without risks. In a split second, you could quickly lose your entire investment.
That said, you need to learn how to protect yourself against each one of them. Thankfully, this article is in your best interest. We will take a look at the top 5 crypto risks and how to protect yourself against them.
Top 5 Risks of Crypto trading and how to protect yourself against them
1. Volatility in the crypto trading market
One of the main reasons why the world is sceptical about crypto trading is the volatility and fluctuating market. The price of the crypto pairs keeps moving up and down, which could positively or negatively impact your investment.
To protect yourself against losing a considerable chunk of your crypto capital, always keep an eye out for the market. More importantly, only invest a small amount which is more beneficial than putting all your life savings. What do I mean? A small capital will, in the end, yield significant returns if you hold in the long term.
2. Futures Trading
If you are a newbie, avoid futures trading, I mean it! That simple concept could completely wipe you out of the market within seconds. Sure, it has huge returns, but it’s not worth the risk of futures trading. But don’t get me wrong.
Once you understand how to operate Futures trading, it’s pretty beneficial. However, that takes years of practice. Anyone telling you they made a ton of money trading futures within a month of trading is straight-up lying to your face.
3. Cybertheft in Crypto trading
Blockchain technology is designed to be theft-free with its decentralized nature and extra security measures. But don’t let that fool you! Hackers found ways to bypass most security measures and can steal your coins if you are not careful.
As such, always store your crypto assets in a wallet that you control and keep your accounts updated with the latest security measures. That will add an extra layer of security to your assets.
4. Financial loss
Today, most people understand the value of bitcoin and are quick to jump into the technology. However, just like gold, bitcoin and crypto trading might be an investment that will likely collapse. I’m not saying it will, but if that ever happens, you need to be ready.
With that in mind, don’t bank all your investment on cryptos. There are other solutions such as Real Estate, Stocks, and Shares that are also profitable. Therefore, always spread out your investment to avoid substantial financial loss.
5. Emerging Altcoins
Trading on bitcoins is quite lucrative, but that’s not the only cryptocurrency with substantial profits. If you want to earn money in crypto trading, you will need to research altcoins that are also profitable. We now have over 5000 altcoins in the market.
And it would help if you did your due diligence. More importantly, understand that trading on altcoins could likely earn you more than trading on bitcoins. All you need to do is have the correct information. Stay tuned for more on cryptocurrencies.