5 Crypto Trading Risks You Should Never Take: Here’s Why – Crypto News Flash | Jewelry Dukan

Cryptocurrencies have cemented their status as one of the most profitable investments of the last decade. Despite the current downturn in most assets, the return on investment in most assets has been stunning. However, it seems that profitability has eaten deep into the minds of some “investors” who want to make a quick buck and forget that these cryptocurrencies are not get-rich-quick schemes. So this greed has caused many to lose their capital to project carpet pulls and sometimes purse losses.

However, we have found that many of these victims do not know what risk to take and what to avoid when investing. Hence, we have curated five pointer risks that crypto investors or traders should never take. Whether you are a beginner or an advanced user, taking this information into account will prevent you from falling into the hands of lurking crypto thieves.

Risk 1: Trading without compliance

While cryptocurrencies started with the aim of avoiding government involvement, it seems that following the rules set by the authorities has become necessary. Therefore, crypto trading apps like BitAlpha AI always encourage their users to check and comply with the crypto trading regulations in their region before investing.

Many countries were involved in regulation. The United States Securities and Exchange Commission (SEC), for example, has been at odds with Ripple over regulatory issues for years. This has prompted Ripple to discontinue some of its targets, although the blockchain company claims it did nothing wrong. The case has not only affected the company, but its users and XRP holders are wondering what the next step will be.

Another example of non-compliance is Nigeria. In 2021, the country’s central bank banned the use of bank cards for cryptocurrency trading. Unfortunately, some traders didn’t get the memo soon enough. This law resulted in the freezing of bank accounts with withheld funds. These and many other reasons why crypto traders should keep up with industry regulations.

Risk 2: Give out your seed phrase

For traders using centralized exchanges, this may not be an issue. However, many merchants followed the “not your keys, not your coins” model. Hence, they choose to store their assets on decentralized exchanges like MetaMask and TrustWallet. While this claims to be secure, if you store your seed phrase or private key on a digital device or share it with anyone else, you are putting your cryptocurrencies at risk.

This is because nowadays hackers have found a way to access your digital devices and if they are stored then there is a risk of being exploited. One way to fix this is to write your password in a safe that only you have access to. Another option is to get a hardware wallet and store your assets on it. Examples of these hardware wallets are Ledger or Trezor.

Risk 3: Trading crypto futures with no experience

One misconception about cryptocurrencies is that you can make tons of profits in a short amount of time. While this may be true for a few people, it is not the case for most. The worst is how complete beginners go to trading derivatives or futures. An easy way to start trading is with the buy low and sell high strategy. Some would prefer spot trading, but getting involved in futures trading as a beginner is self-defeating.

If you have ever heard of the liquidation that takes place in the crypto market on a daily basis, you know how risky futures trading is. As an inexperienced trader, without the right guidance, you can lose all of your invested capital in one trade. It is therefore recommended to learn the basics and trade cautiously, even if the most experienced traders lose just as much. If you feel you have the courage, only attempt money you can afford to lose.

Risk 4: Buy Top or FOMO

Buying the top is simply buying a cryptocurrency when it is at a price where it has made a lot of gains. This is where many newbies make a mistake. Just because there’s hype about an asset doesn’t mean it’s the right time to buy it. For most people, the fear of missing out speaks. One clear scenario is Bitcoin pumping to $69,000 in 2021. During that time, many novice cryptocurrency investors FOMOed and bought Bitcoin, unaware that this would be their all-time high (ATH). Since the ATH, BTC is far from reviving it as the market is currently in a bear state. It means one thing: Investors who bought at the top are currently in deep losses. So make sure you do your own research and judge whether you’re not buying tip of a coin.

Risk 5: Buying a meme cryptocurrency

Meme cryptocurrencies are assets with no known utility, but they have the potential to skyrocket your investments. Examples of these cryptocurrencies or shitcoins are Dogecoin and Shiba Inu. Of course, these meme coins are up as much as 10,000% in 2021. However, that doesn’t mean that every shit coin that pops up is a potential Shiba Inu or Dogecoin. In most cases, buying some of them will result in the loss of your capital. In severe cases, all other assets in your crypto wallet will be emptied.

So, as a risk management strategy, try as much as possible to avoid buying meme coins that come your way. Again, the same way Shitocine can make you an insane ROI is the same way you can lose it all. In cases where you can make a profit, it is important to ensure that you do not become unnecessarily greedy. Get out of the trade and take the profits, no matter how small.

The final result

In closing, we hope you’ve been able to pick up a lesson or two from the aforementioned risky Adobe. While this article is not intended as investment advice, it is intended to ensure that fewer and fewer investors understand the risks involved in crypto trading. Additionally, knowing the potential consequences of these risks can help prevent more people from taking the wrong path.

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