It is true that cryptocurrency trading can be very profitable. However, the inherent risks are extremely high at the moment. This means that you need to know what you are doing before getting involved in this area. Here are some tips for crypto traders.
1) Use Limit Orders – When it comes to buying cryptocurrencies, use a limit order instead of market orders. A limit order means that you set the price and then wait for another trader to decide on buying your cryptocurrency at that price or not. The advantage of this approach is that you don’t need to keep checking on prices to ensure that they meet your requirements. It also ensures that you get a good deal because market orders often leave out traders who place a limit order at the same price where the market orders are placed.
2) Keep Track of Trends – The cryptocurrency market is extremely volatile and so, you need to keep an eye on trends. In fact, you can even set up alerts on your email or phone to notify you when there is a trend so that you can decide whether it is the right time to buy or sell your cryptocurrency. Generally speaking, you should only trade during trends because that is when most money is made or lost.
3) Use Stop Losses – Another great tip for crypto traders is to use stop losses. These are automatic triggers that cause you to sell off your cryptocurrency when prices go too low. The idea behind this is that you will be able to limit your losses and, therefore, avoid making really bad decisions because of the pressure that you might feel if prices drop quickly.
4) Do Not Use Leverage – Leverage can make trading easier but it also increases risks significantly. This means that trading with leverage should only be considered by experienced traders who know what they are doing. You should only use leverage if you have a high degree of confidence in your trading abilities and knowledge of the market.
5) Play Decentralized Exchanges – For the most part, centralized exchanges are not safe because they are susceptible to hacks. This means that you should only use decentralized exchanges when buying and selling cryptocurrencies.
6) Use Security Tokens – If you are looking for an alternative to ICOs, consider using security tokens. They provide similar benefits while reducing the risk of scams and hacks significantly because they do not need to be stored on a central server like ICO tokens.