How To Protect Your Downside When Trading Crypto

How To Protect Your Downside When Trading Crypto


Trading crypto can be risky and have serious downsides. Fortunately, there are a few simple steps that you can take to make sure your downside is minimized. This article will discuss these steps and how you can use them to your advantage.

Step #1 - Set Stop-Loss Orders

The first thing to do is to set a stop-loss order for any trades you make. This will automatically sell your cryptocurrency if it drops below a certain price, allowing you to minimize your losses. Setting a stop-loss order also allows you to focus on other aspects of your trading strategy, as you don’t have to constantly monitor the market.

Step #2 - Diversify Your Portfolio

Another way to protect your downside is to diversify your portfolio. This means investing in a variety of cryptocurrencies instead of just one or two. Doing this will spread out your risk and make it less likely that you’ll suffer a major loss if the market drops.

Step #3 - Limit Your Leverage

Leverage is an important part of trading, but it can also be dangerous if used incorrectly. To minimize your downside, it’s best to limit your leverage to no more than 5x or 10x of your total investment. This will limit your losses if the market moves against you, but still, allow you to capitalize on potential gains.

Step #4 - Monitor Crypto In Real-Time

By using a free crypto portfolio tracker like Moonrig.io, you can monitor your crypto in real-time and be alerted to any major changes or fluctuations. This will help you stay on top of the market and be prepared to react quickly if necessary. When you receive instant crypto notifications, you can make more informed decisions and be ready to take action right away.

Step #5 - Keep Custody of Your Coins

Even with the most successful trades, losing your coins due to hacks or scams is a real risk. To ensure the safety of your crypto, it’s best to keep custody of your coins at all times. You can do this by storing your coins in a secure wallet or exchange and keeping them offline.


Take your profits and move them to cold storage when possible. Moonrig.io is a great software for this rule because it doesn't require your private keys to optimize your insights.

Step #6 - Evaluate Risk To Reward Ratios

Finally, it’s important to evaluate the risk-to-reward ratio of any trades you make. This means looking at both the potential gains and losses before investing, so you can be sure that the reward outweighs the risk. Look for asymmetric trades, where the potential reward is much higher than the risk.

Final Thoughts

By following these steps, you can protect your downside when trading crypto and limit your losses if the market moves against you. Remember to be aware of the risks associated with trading crypto, and always do your research before investing.