In general, trading in the financial market requires an in-depth understanding of the instruments available for trade plus the risks pegged on them. For cryptocurrency, the most obvious risk is the decentralized nature of the market and the constant release of new tokens and coins.
In addition, the intermediaries who offer access to the trading floor can also impact your trading experience through the platform services they provide. Binance, in particular, has a significant share of crypto traders using the platform to trade an array of digital assets in the crypto market.
Savvy traders and investors prefer trading on Binance simply because it’s an intuitive platform with affordable service fees. However, you must learn how to navigate the trader terminals and tools to protect yourself from the volatile crypto market, especially if you’re a newbie trader.
Below are six tools to reduce risks while trading on Binance.
Spot Grid Trading
Spot grid trading uses trading bots to carry out market analysis and create an order above and below the market price or set price. The bots automatically set buying and selling positions when the crypto market is in a range at timed intervals.
Once the grid of orders is complete, the bot will increase or decrease the positions taken to control the risks presented by market volatility. The small market price changes create profitable opportunities in such situations, and the trading bot will instantly collect them for you.
Spot grid trading uses a quantitative trading strategy to enter and exit trading positions on autopilot. Such tactics help you make calculated moves on the trading floor and avoid losses. However, trading bots can significantly impact your trading, and it’s best to get more information about it from the crypto community or read Quadency review.
Trading Plans
Going onto the trading floor without a trading plan increases your chances of losing your portfolio. A trading plan lists the essentials for action and reactions when the crypto market is too volatile for your portfolio.
Binance strongly recommends that you develop a plan and enhance your trading habits to capitalize on the speculative crypto market. It helps to identify which strategy works best for you and which tools will give good returns consistently.
Stop-Loss Orders
A stop-loss order is a risk management strategy that entails placing acceptable loss limits on your underlying assets. If the market movement doesn’t favor your trades and the price goes south, a stop-loss order will ensure the losses incurred don’t go beyond your price mark.
Typically, savvy traders place the stop loss order first in their trading plan to safeguard their market entries and exits.
Here’s an example of how the stop order works:
If 15 BNBUSDT smart contracts cost USD$500 on Binance, you can set a stop-loss order at 20% below the market price. It’ll ensure that your trades will close automatically once the market price reaches the stop-loss order.
Binance P2P Marketplace
Binance peer-to-peer (P2P) marketplace is the simplest way for traders to buy and sell cryptocurrency on the platform. It’s an avenue for users to trade using their preferred payment method and can include your local money.
You can leverage the Binance P2P marketplace and capitalize on the benefits like Escrow service and zero fees available for users on the platform. In addition, there are over 300 payment methods and more than 70 local currencies acceptable in the exchange. Also, you can enjoy live chats with your fellow traders concerning the crypto trades and have access to platform support.
Margin Trading
Margin trading involves accessing third-party funds to trade or transact crypto assets. Binance offers such options to traders willing to take more trading positions to capitalize on the market volatility.
You have the opportunity to borrow funds from your margin account and trade your preferred cryptos with ease. Once done, you’ll have to pay back and settle your account.
However, you must understand the underlying trading tool before using it in your trading business. Be sure to research more to avoid jeopardizing your portfolio.
Convert
Trading crypto can be challenging if you don’t understand the basic features of a trading chart. You’ll encounter candlesticks, market orders, and stop limits, among other crucial chart components that can help you determine what’s happening in the crypto market. You must be able to decipher all the indicators and take advantage of the crypto market volatility.
On the Binance platform, convert helps you exchange cryptocurrency with a straightforward click on coin A to coin B at zero fees. The interface is user-friendly and can significantly help to reduce risks when planning your trades.
Final Thoughts
Cryptocurrency trading can be challenging if you don’t have a good grasp of the underlying market. The market is speculative as the price fluctuates unannounced and can wipe your account clean in seconds. Luckily, intermediaries such as Binance have developed tools to help your trading business. However, you must be conversant with the platforms beforehand to enjoy your trading experience.
