Crypto Margin trading is rewarding as well as risky, while the investor needs to be smart and familiar with the basics he also needs to be aware of basic facts about crypto margin trading. Sample this –
You are an investor putting money worth $10,000 in cryptos and couple of days later the same $10,000 is valued at $20,000, and a few days later the investment is just $200. It’s insane! Isn’t?
Hence, it gets crucial for investors to know the basic facts of crypto margin trading. Let’s get started –
Facts of Crypto Margin Trading
You could be next Vitalik Buterin, but margin trading needs only veterans. The investor should know the rules of the game. The world of cryptocurrency and on top of it applying margin trading strategy is a risky approach, and hence best suited for experts. Reading a book or a Reddit comment that says how I made $10,000 via crypto margin trading could be fabricated stories with no supported base. Hence before making any investments gain experience, get trained, acquire skills and then jump onto the arena.
Being a pro does not entitle you to opt for higher levels of leverage. With crypto margin trading, the mantra is – BE A TURTLE. Effective risk strategy is essential but starting slow is also much more crucial. Start by using a lower level of leverage and do not put a massive investment from day one, estimate your loss in case the market isn’t expected as you speculated.
IF you are trading too much in the crypto world that is a highly volatile market, it can even lead investors losing 200-300 BTC in a few days.
Risk Management is critical
Starting slow is one of the active risk management strategies and so is the option of using a stop loss. It boils down to “How much you can lose”? So if you bought bitcoin at $10,000, you could set a stop loss order at $8,500. It would help in limiting your loss to $2,500.Be very cautious while using stop-loss as a risk management tool, because if you set a price too close to buying price, you may lose and put a stop occur before any profit is seen. Or if you select a broader range that could also result in substantial losses. Read more here at Five Crypto Margin Trading Tips Investor Should Know
Cushioning is prime
Last but not the least is never ever put all your money on a single trade, even though you are 200%sure of returns. Make sure to keep some spare cash for unforeseen circumstances and when the market is not on your side.
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