Date:
21st Aug 2020
Author:
CryptoGT
Safety Tips When Trading Cryptocurrencies
Many traders understand that highly volatile assets like cryptocurrencies come with greater opportunities but also greater risk. However, volatility isn’t the only risk traders of digital currencies need to consider. As a fairly new asset class, new developments take place almost constantly, meaning traders need to follow the news diligently. In addition, being a digital asset, they are vulnerable to cybercrime, with ample examples of crypto wallets and exchanges being hacked ever since the launch of the very first cryptocurrency, Bitcoin. The memory of the 2019 Binance hack is still fresh in the memories of crypto traders.
On May 7, 2019, one of the leading crypto exchanges in the world, Binance, experienced a security breach, where hackers were able to steal 7,000 Bitcoins, worth a whopping $40 million. So, the first step in trading cryptocurrencies is to choose the safest means of participating in the market. The problem with trading these digital assets on exchanges is that many exchanges are not regulated, and exchange wallets are vulnerable to fraud and theft, despite advancements in technology.
This is why both experienced and novice traders turn to trading crypto CFDs or contracts for difference. The benefit of CFD trading is that you do not need to own the cryptocurrency or store it in any type of wallet to be able to trade it. Instead, you trade cryptocurrencies by entering into a contract with another party, such as your broker, while speculating on the price movement of the digital currency during a pre-defined timeframe. In addition, robust trading platforms like MT4 and MT5 offer all the tools required to make an informed decision regarding future price movement. They also offer automated trading opportunities, so that you can execute your trading strategies without needing to monitor the market constantly.
Having said that, any type of trading comes with its own set of risks too. This is true of CFD trading as well. So, before you start trading cryptocurrencies, here are some safety tips that can be useful.
On May 7, 2019, one of the leading crypto exchanges in the world, Binance, experienced a security breach, where hackers were able to steal 7,000 Bitcoins, worth a whopping $40 million. So, the first step in trading cryptocurrencies is to choose the safest means of participating in the market. The problem with trading these digital assets on exchanges is that many exchanges are not regulated, and exchange wallets are vulnerable to fraud and theft, despite advancements in technology.
This is why both experienced and novice traders turn to trading crypto CFDs or contracts for difference. The benefit of CFD trading is that you do not need to own the cryptocurrency or store it in any type of wallet to be able to trade it. Instead, you trade cryptocurrencies by entering into a contract with another party, such as your broker, while speculating on the price movement of the digital currency during a pre-defined timeframe. In addition, robust trading platforms like MT4 and MT5 offer all the tools required to make an informed decision regarding future price movement. They also offer automated trading opportunities, so that you can execute your trading strategies without needing to monitor the market constantly.
Having said that, any type of trading comes with its own set of risks too. This is true of CFD trading as well. So, before you start trading cryptocurrencies, here are some safety tips that can be useful.
The first step in a satisfying trading journey is to choose a reliable trader who offers not just CFD trading but the cryptocurrencies that you are interested in. You might wish to trade crypto-fiat pairs or crypto only pairs, or even synthetic pairs. What deposit and withdrawal methods are available in both crypto and fiat currencies? Do they offer demo accounts for you to practice, learn and test strategies before trading in the live market? Do they offer the best trading platforms, such as MT4 and MT5?
Leverage allows you to enter into positions that are much larger that what you can afford with only the capital in your trading account. Through leverage, you need to put up only a fraction of the total cost of the position, while the broker lends the remaining amount. While this magnifies the gains that can be made in trading, it also multiplies the losses when the market moves in an unfavourable direction. So, make sure you understand the leverage being offered, how much you can stand to lose, what your risk appetite and trading goals are. All this will help you choose the leverage appropriately. Regulatory bodies have set the limit for leverage at 1:500 for crypto trading. This is to ensure that traders do not end up completely wiping out their capital with a single trade.
Diversifying is the key to long-term trading success. This means that when one cryptocurrency is performing poorly, your investments in other cryptocurrencies might compensate for any losses. Continue to learn as much as you can about cryptocurrencies, established and new ones, so that you can spread out your positions across the most promising ones. This can be a very effective risk management measure.
Talking about risk management, in CFD trading too, it is important to put the appropriate risk management measures in place. Experienced traders set their stop loss and take profit orders even before they enter into a position. This helps minimise loss and lock-in gains. Without these risk management measures, it could be very easy to get tempted to either hold on to a position for too long or to close a position before it can earn. Risk management is also an effective way to keep emotions out of trading decisions. Emotions like fear, greed or FOMO can lead to trading decisions that are not completely based on robust analysis of the market.
So, while CFDs might be a safer way to trade cryptocurrencies, it is important to take the appropriate steps to ensure that each trading position is as safe as you can make it. No market is completely risk-free. It is only when you do your research well, use robust analytic tools and risk management measures that you can ensure that your trading journey is a fulfilling one.
So, while CFDs might be a safer way to trade cryptocurrencies, it is important to take the appropriate steps to ensure that each trading position is as safe as you can make it. No market is completely risk-free. It is only when you do your research well, use robust analytic tools and risk management measures that you can ensure that your trading journey is a fulfilling one.
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Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.
Cryptocurrency trading can be extremely risky and can lead to large and immediate financial losses. Crypto assets are highly volatile and can result in significant losses of your capital over a short period of time. Cryptocurrencies markets are unregulated services which are not governed by any specific regulatory framework. The provision of such services is not being directly provided by the Company but through licensed third parties.
CryptoGT does not provide its services to residents of various jurisdictions such as but not limited to the United States of America, North Korea and Cuba.
CryptoGT currently accepts only cryptocurrencies as method of deposit.