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What Are Some Risks That You Will Face When Trading Cryptocurrencies?

The idea of trading cryptocurrencies is definitely very fascinating, especially when you have so many online trading platforms claiming to make you a millionaire. However, you should not succumb to such false claims. Marketers have always made things sound too big when they are actually not. Yes, you can become a millionaire with trading, but it will require a lot of time and proper and accurate trading. You must know the risks that are involved in trading digital coins. Let’s take a look at the three most common risks while trading cryptocurrencies.

The Three Most Common Crypto Trading Risks

1.      The Intense Volatility

That’s the first word you have to keep in mind when you decide to trade cryptocurrencies. Being a new market, it still goes through some huge swings, all within a day. If you do not know already, there have been instances in the past when Bitcoin moved up and down by 20% of its value within the same day. That can prove to be nightmare for new traders who want to see more stability in the market and some flexible conditions so they can experiment with their hard-earned money. However, you will have to familiarize yourself with volatility if you wish to trade cryptocurrencies.

Now, what you can do is that you can use hedging techniques to get yourself out of the sheer danger. With hedging, you can enter multiple trades at the same time. You will trade correlated assets that move in opposite directions so if you incur a loss in one, you get a huge benefit in the other.

2.      The Online Scams

Unfortunately, the world of online cryptocurrency trading has been infested with a lot of cyber criminals. These people start their websites as brokers and make people sign up with them by promising huge returns. You can find many auto trading bots that promise people thousands of dollars in the same day. These people are tapping into the curiosity of the people around the world. People want to trade cryptocurrencies to make money from them. Many of these people are young individuals who have known nothing about trading.

These fraudulent entities are targeting these young people to make them shell out their money. They promise big money and huge rewards. However, when the trader funds his/her account with the upfront deposit, the platform disappears.

3.      The Poor Judgment

Again, this particular risk has to do with the nature and age of the cryptocurrency market. The market is new so you will see a lot of new assets dropping in every single day. Just a few years ago, you had only a handful of cryptocurrencies. If you look at an online exchange today, you will be surprised to find out more than two thousand cryptocurrencies. However, you would be doing yourself wrong if you trusted in all of these currencies. Many of the cryptocurrencies that seem promising today will disappear tomorrow. For that reason, you should pay proper attention to details, and wait for some time before you invest your money in a new cryptocurrency.

The best way to avoid this problem is to sign up with a broker like XTRgate. A broker will not put any dubious and unacceptable cryptocurrencies in its asset index. While XTRgate offers you the opportunity to trade many different cryptocurrencies, it does filter out the ones that are nothing but scams.

Takeaway

You do not have to feel discouraged because of the risks that are associated with trading cryptocurrencies. Just so you know, the same risks are associated with every other form of trading as well. Keep finding out about new cryptocurrencies on Reddit and Quora. Trust the established cryptocurrencies before any other. Finally, wait a few months to know the truth about a cryptocurrency before you spend your  money on it.


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