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How Can You Reduce The Risk In Bitcoin Trading

How Can You Reduce The Risk In Bitcoin Trading

Published by Programme B

Cryptocurrencies are high-rewarding investing. However, at the same time, they are volatile and possess high risk. Experts say that even though you have been in the Crypto trading industry for a long time, you must always make every decision after deep research and careful consideration.

While it is true that the Cryptocurrency trading industry has given more millionaires to the world than any other industry in the last decade, it is also true that many have lost their entire life savings.

Does that mean nobody should invest in Cryptocurrencies? No! It simply means that when you are investing in Cryptocurrencies, you need to be careful about what Cryptocurrencies you are investing in and what their future looks like.

The best way to know that is by having all the information about the Crypto trading industry. The more you know what is happening in the industry, the better you will be able to make decisions. That being said, if you want to know what is happening in the Crypto trading world, visit quantum ai.

What Are The Risks Associated With Crypto Trading?

  • Highly Volatile: The cryptocurrency market is highly volatile. As it is young compared to the traditional investment, even a small change in volume seems like a big wave. Due to these unstable characteristics of the Crypto trading industry, investors are reluctant to invest in it.
  • Unregulated: Cryptocurrencies are decentralized. That means they are not regulated by any central authority. This constantly raises the issue of investors’ safety and interest.
  • Irreversible Transaction: Transactions are immutable and only take a couple of minutes to complete. Once the transaction is done, it cannot be reversed unless the other side is willing to.

How To Mitigate Crypto Trading Risks?

With such volatility and fear of Crypto winter, it is natural for investors to avoid investing in Cryptocurrencies. However, there are a few steps you can take to reduce the risk factor in Crypto investment.

1. Invest In Companies With Crypto Holding

If you are worried about directly investing into the Crypto trading market, you could instead invest in companies that have Crypto holding and years of experience trading in Cryptocurrencies. The company can then act as a buffer between you and Cryptocurrencies. 

However, you must look into the level of risk a company is taking and the number of Cryptocurrencies they are trading with. In addition, you must also go through their past performance in Cryptocurrencies. This will give you enough information to choose the right company to invest in.

2. Having A Stop-Loss Order

While experienced traders make it their habit to have a stop-loss and stop-gain order in place. What it does is that it puts a barrier around your profit and loss. When you reach a profit barrier, you sell your assets to make a profit despite knowing that it might move up even further. 

Stop-loss barriers ensure that you accrue a limited loss from your investment. When your assets are performing low, you have a stop loss order to tell you it’s time to sell instead of waiting for the market to reach break even.

Investors use stop-loss orders as a risk management tool and strategy to exit the market.

3. Only Invest What You Can Lose

There is a golden rule when you are investing – Invest only that much which you’re prepared to lose.

This stands true not only for Crypto investment but also for normal stock investment. Losing money in a high-volatile market is quite easy. And here we are talking about the most volatile market, Crypto trading.

The best way to decide how much you can invest in Cryptocurrency and tolerate the loss would be 1-2% of your account balance per trade. You must not breach this mark.


Like any other investment, Cryptocurrency has its Pros and Cons. For instance, on the one hand, Cryptocurrency offers privacy and secrecy. And on the other hand, the same privacy can hamper fraud detection and scams.

Everything comes with good and bad. Now it is up to you to decide where you want to go. If you have finally decided to invest in Cryptocurrencies, look into various techniques for risk management to avoid any mishaps in the future.