To say that cryptocurrency trading is making up for lost time would be an understatement. In recent years, it has become more popular than conventional stock or gold trading. An increasing number of people are entering the crypto market.

In Japan alone, there were 3.5 million active cryptocurrency traders as of Mar 31, 2018, according to data gathered from 17 white label crypto exchanges in the country. This reveals that crypto investors in their 20s, 30s, and 40s make up a considerable share of the total crypto trader population in Japan.

As most traders are young, they have little to no trading experience. The extreme market volatility, coupled with the lack of experience, puts most crypto traders at risk of losing their capital. Chances are you are one of these traders trying to make some quick digital bucks.

We have gathered six tips that will help you minimize risks and improve your crypto trading.

1. Learn, Learn and Learn

When it comes to crypto trading, knowledge is your best weapon. You need to learn as much about the crypto assets you want to trade, cryptocurrency trading software you will use, and the trading strategies you will employ as possible. However, learning isn’t a one-time deal in the crypto trading realm.

As the market is continuously changing, learning is a perpetual process too. You need to learn about the changing circumstances, the driving forces behind them, and potential outcomes to make profit consistently. You will also need to add more trading strategies to your arsenal, which will again require you to research and learn.

Despite everything you have learned, you will lose a few trades. Don’t let this discourage you. Instead, you must take this as an opportunity to learn from your mistakes. Try to figure out what caused the loss and how you can avoid it in the future.

2. Don’t Put All Your Eggs in the Same Basket

Most crypto traders, especially rookies tend to invest in a single digital asset that is taking off at the moment. However, this risky move also increases the possibility of losing all your hard-earned money when its value goes down. The chances of one cryptocurrency doing consistently well are almost impossible, given the volatile nature of the crypto market.

That’s why seasoned traders will advise you to diversify your investment as much as possible. First, you need to divide your funds between the exchange platforms and your crypto wallets (hot and cold).

Hot wallets are more convenient, but also prone to cyber attacks while cold wallets offer better security, but less convenience. Scattering your digital assets in this way helps to protect them from scams and hacker attacks. In one of the most recent cyber attacks, hackers stole virtual currency worth about $31.5 million from South Korea-based exchange called Bithumb.

3. Invest What You Can Afford

Not just trading losses, but cyber attacks may also lead to irrecoverable losses. If you lose money that you have borrowed from a friend, bank or a private lender, you will need to work twice as hard to pay it back. It’s a surefire way to bankruptcy. So, take your financial situation into account before you start trading.

Besides, using borrowed money also has an adverse psychological effect on your trading capability. It puts you under considerable pressure to make more profit in less time. This, in turn, can affect your trading skills resulting in losses.

Read Full Article