How to Avoid Losing Money in Bitcoin

Many people see Bitcoin trading as an excellent way to make money. But trading Bitcoin is not an activity without risks. What’s more, Bitcoin trading requires due diligence. To maximize your profits, you must research and monitor the crypto market to know the appropriate time to purchase or sell your tokens.

While Bitcoin is becoming a mainstream asset, it’s still volatile. That means you could lose a significant amount of your hard-earned money while trading this digital asset. Today, the world has many crypto exchanges and brokers that don’t require any verification. That means you can easily register with a platform like Bitcoin Circuit website and start trading Bitcoin. But this should prompt you to trade or invest in Bitcoin blindly.

Once you have an account with a crypto exchange or broker, you can start setting orders whenever you want. However, successful Bitcoin trading entails more than knowing to place orders and waiting for profits. You require specific skills and a plan for reacting to price changes. For instance, you need a strategy to guide your actions if the price turns against your crypto position. Here’s how to avoid losing money with Bitcoin, whether trading or investing.

Learn to Manage Risk

Being responsible for your security is the primary challenge for a Bitcoin investor. Since Bitcoin is decentralized, you won’t have a bank or a government helping you with risk management or mitigation. If somebody hacks your crypto wallet account, you lose the Bitcoins in it, and you can’t recover them. Essentially, you don’t have built-in protections when investing in Bitcoin. Thus, you take care of yourself.

One way to manage risk when trading or investing in Bitcoin is implementing stop-loss orders. That way, you can decide on the loss you’re willing to take. Thus, you can avoid losing more money trying to recover from bad trades.

Use a Reputable Crypto Exchange

You will most likely use a brokerage or an exchange to purchase or sell Bitcoin. Unfortunately, crypto exchanges have been victims of hacks in the past. For instance, criminals hacked Mt.Gox back in 2014 when people completed around 70% of global Bitcoin transactions through the platform. Hackers made away with Bitcoins worth around $450 million.

Therefore, don’t use any crypto exchange you come across to trade or invest in Bitcoin. Instead, take your time to identify a platform that hackers have never penetrated. Also, check the insurance provisions of a crypto exchange and the reserve it has in cold storage. An ideal crypto exchange should also have a bug bounty program for rewarding ethical hackers if they identify vulnerabilities.

Embrace Good Trading or Investing Habits

Successful crypto trading or investing requires strategies. Therefore, take the time to study different Bitcoin trading techniques to determine what works for you. What’s more, embrace appropriate crypto trading or investing habits.

For instance, don’t spend your entire budget on a single trade. Instead, divide the amount into percentages and spread them over a certain period. Also, don’t chase losses or overuse leverage. Remember that Bitcoin is volatile, meaning you could lose everything you invest in it within minutes.

Be Careful with Your Devices

You don’t want to lose your Bitcoin because somebody planted malware on your computer or you used a password that anybody can quickly hack. To ensure your safety, update the device's software you use to access your crypto exchange account or digital wallet regularly.

Also, learn about Bitcoin scams and risks like phishing that criminals can use to steal your hard-earned tokens. Ideally, don’t click on every link people send to your inbox or respond to every email.

The Bottom Line

Nobody has hacked into the Bitcoin network so far. However, people have lost funds through crypto exchange and wallet hacks. The tips can help you avoid losing money in Bitcoin.

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