How to Reduce Risks of Crypto Trading



Jun 17, 2018
Cryptocurrency trading gives a great opportunity for traders to make a fortune. Crypto traders are frequently able to make a lot of money from their trades.But those who do, learn how to lower their risks so their trades are in their favor. Most new crypto traders are often willing to just jump in and start trading without doing their due diligence.

Experienced investors understand that avoiding certain pitfalls is as important as brilliantly executing trades. These activities go hand in hand, and make you a better trader. Let’s consider some of the popular risks and pitfalls you need to avoid or minimize while trading cryptocurrencies.

Don’t Trade with All your Funds

Never trade with all your capital. You have always keep a predetermined percentage, that will save you from losing all your capital in the event of a huge market downturn. What we recommend is never move all your capital to your crypto exchange of choice.

More importantly, think diversification of your assets. From the allotted capital, spread your trades across multiple exchanges.


This helps lower your risk of losing everything in the event of a hack or data loss. The same rule applies to cryptocurrencies you trade. Instead of just trading one crypto, pick 2-3 and spread your trades over them. This minimizes your risk and keeps your capital safe.

Determine Entry/Exit Time

First of all you have to determine when you plan to enter the market, and when have leave it. Predetermining these two points before any kind of trading is very important and is the key to successful trading.

Every trader aims to buy low and sell high. That raised the question at what prices? Without determining this earlier, you’re more than likely to make mistakes while trading.

For example, if you plan to trade Ethereum tokens, you can set an entry price of $380-$400 per ETH, and an exit price range of $450-$490. This will allow you to determine how much you want to invest early on and what your profits would be.

For determining these prices you have to study of buy and sell walls over a specific time frame. Once the data have been analyzed you can set your buy and sell prices. Of course, there are other factors to consider like market sentiments, news items, and a few other factors.

While you are analyzing buy and sell walls info for getting an idea of what your buy and sell prices should be, look for the main trends in buy and sell orders.

If there are a lot more buy orders — as evidenced from an abundance of green walls — then it might imply that there are more people willing to hold their cryptos than those willing to sell. This certainly is a good time to buy.

Pay attention to the sell walls (red walls) which show market sentiment and bearish trend approach. In any case, don’t set your prices without monitoring the current market prices as your buy and sell prices can’t be arbitrary or determined in a vacuum.


For example, if you decide that your entry point would be when 1ETH equals $190, you might have to wait a very long time as Ethereum’s price probably isn’t going to drop that low in the foreseeable future.

Bear in mind, that while genuine buy and sell walls can help you make profits, fake walls can cost you a lot of money. You must know how to spot these walls too as they are often indicative of price manipulations through pump and dump schemes.

Just look for a lack of a price runway, a tall/vertical market movement and lowest sell and highest buy orders. These are designed to fool traders into jumping on, thinking they have a good deal, when in reality, they have no supporting market sentiment.

You can achieve good trading results by analyzing order books or even a combination of order books and technical analysis. It isn’t unusual for traders to often utilize support as entry points and resistance as exit points. It all depends on the traders experience knowledge and preferences.

Keep Your PC Secure
Progress is on the march: hackers are becoming more innovative in their hacking quests. Apart from malware and keyloggers installed on your computing device, many are actively using phishing strategies to execute commands that will empty your wallets or provide access to your exchange accounts.

Always ensure that your computer is secure by updating your antivirus, antispyware and antimalware tools. Use long, complex passwords for your exchanges. As a rule, don’t click on links in emails from unknown senders.

Pay attention to your exchanges’ URLs. They must all start with https and have a green padlock beside them on the upper left corner of the URL bar.

Fortunately, most exchanges are secure and less vulnerable to attacks. However, to maximally secure your crypto-state, we highly commend checking out the article Crypto Security Guidelines.


New member
Sep 21, 2018
To summarize it all and also to add on what CoinExpert has not said, these are my rules:

1) I only take quality trades: It is better to take a sniper approach rather than machine gunning on trades. What's the point of wasting time and money? Did you know that not trading when the herd is out there in the market is a very defensive position to take?

2) Not every exchange is reputable. So in case you find one that looks attractive and would like to try them out, just research it on popular cryptotrading forums like reddit, BitcoinTalk etc.

3) Don't put all your eggs in one basket: I use at least 3 exchanges for my trading because I don't trust even the best exchanges out there. So in case one fails or decided to steal all my coins, I won't cry so much.

4) Don't store your coins in an exchange: It's ok to leave your coins in an exchange if you are actively trading. But if you want to store them, I suggest that you purchase a hardware wallet. I have reviewed some popular hardware wallets for Bitcoins. Read it to get an idea of whether this is going.

Ultimately, your goal is to preserve your capital by managing your risks well. You don't have to trade every day to make money.
Likes: Golem


Jun 18, 2018
Thanks for your substantive additions. (y)It’s always useful to learn at first-hand on investing.
Likes: Kenn65

Cedric James

Dec 19, 2018
A good online forex broker should allow small accounts and deposits, so you can try it with a little money before starting serious trading.
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