Different level of risk in crypto currency trading

[Finn-in-web]

Hi,

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out? When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...

If anyone could shed some light on this that would be appreciated.

[Shkoppola]

If you simply buy or sell in the spot trading only what you invest is at risk. You probably get the risk alert when you move on margin trading or others working with leverage, as it happens to me on Binance. But as far as I know you can lose what you invest, due to the high volatility and the leverage. For further info I suggest you to read some tutorials on your exchange, otherwise stick with the spot trading.

[Vicky agarwal]

spot/future /leverage /scams /news based manipulation /whale manipulation /exchange gone ,and many more

[el kaka22]

There is no place legally able to ask for more from you, in places like robinhood which deals with real stocks and margin trading and leverages, they do ask more from you, you could spend more than you invested in robin hood and in other stock market places, you basically take out a debt for investment and not really to yourself so that makes things easier, in the end company only buys stocks and they ask the difference from you instead, and not really put money into your bank account.

So, stock market has what you are afraid of. However in crypto world people do not give their details everywhere, some places ask for your KYC but as long as you do not share your KYC they can't know who you are and that is why they can't charge you anything more than what you put in there.

[so98nn]

[...]
But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out? When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...
[..]

They have stated the reason by themselves and thats High Volatility of the coin.

So if I have to explain this in short words then I would compare BTC with any other altcoin. Here, you know very well BTC is invested heavily all the time, it's total 24 hrs market cap is always higher but it doesn't move the prices by crazy thousand dollars each time. However, an altcoin is easy to move with smaller investment and this is known by many traders. So they altogether invest a lot, pump and dump these coins and thus it could cause lot of movement (volatility) in them.

So you will never know at what point are you and whether is it right one to invest into or not. It could happen you may invest at X price which already hyped one and in the second movement it could go down with large difference causing extensive loss to your investment.


These are kind of logics behind this. If someone is having another one then I would love to read that one as well. But this is what volatility risk is.

[jossiel]

The majority of the cryptocurrencies bear the same risk except for the stable coins. From the root word, they are stable and serves as the fiat in the crypto market.

Bitcoin is risky and altcoins too.

Defining them by level, they are the same in levels. A good basis is to look at the liquidity or volume of a coin. It will give you an idea if it's going to fluctuate that much by looking at the high daily volume. But if that coin doesn't have that much, just leave it and don't buy it.

[TheUltraElite]

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

Crypto is not a financial product. It is the currency. The product would be the derivative like options or futures here.

The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

That statement is applicable to any type of investment. Nobody will tell you this in every place. You have to assume it.

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out?

In spot trading you may buy some shitcoin and get stuck not being able to sell back. In futures and perpetual swaps you will be gambling on your money essentially and risk losing it all. Hence Spot is somewhat less risky provided you know what you are buying and selling.

There is no variation of risk with amount here. Markets can go down any moment and you will be stuck in the worst case scenario, but practically buying bitcoin and holding for long to sell is profitable as per the last 10years records.

When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...

Cant say unless you show the image here.

[maydna]

As far as I know, the cryptocurrency risk will be different between one coin to other coins because the price is different too. Even if you invest in bitcoin, you will have a risk of losing your money value.

Every investment will have risk, but we can minimize the risk by learning how to prevent it. The higher the product/coin volatility, the risk will be bigger, so you need to know how to reduce it.

Perhaps, when you buy bitcoin or other coins at a price now, the price can up and down anytime. If the price is down, you lose your money value because it is down from your buy price. But you have a chance to see the price will bounce again to the high price in the next hours or days. If the price still down, even it is down deeper, you can cut loss at a price now, so you can buy back the coin and hold it for a while.

If the price can increase back, you can sell it, and you will make a profit.

[semobo]

Every cryptos other than stable coins having volatility and it ranges depends on the coin's price, market cap value, existence and potential.There is no way to identify or reduce the price volatility that is why some exchange have that warning.But this is not really a warning,its just an advertisement for their platform.

[shield132]

Hi,

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out? When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...

If anyone could shed some light on this that would be appreciated.

As far as I understood, you mean that if you invested $1000, is there any chance to lose more? i.e. you may mean that for example bitcoin's price will go into minus and you'll have to pay that debt, am I right? The maximum you can lose is the money that you invested in the beginning but on another hand:
1. You invested $1000 and got $14000. Price went to zero, you lose $14000. If price kept $1000 and then went to zero, you lose $1000. But the most curious thing is that it happens like people still trade with dead coins or there are exchanges that still carry dead coins.

[Kupid002]

Hi,

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
.

yes that's the maximum you can lose in trading  thats all of your capital that you  use to start in trading .

The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)
.

Crypto`s is highly volatile thats why you will find many warning when you plan to start trading. its normal because that Was the risk of that investment and investors should know that before start buying any coins.

[Silberman]

Hi,

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out? When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...

If anyone could shed some light on this that would be appreciated.

You are asking two different questions, the first is do different assets that are on the same market present different risks? And the answer to that is yes, bitcoin is way less risky than a coin being released during this year and the reason is that bitcoin is the leader of this market and it will remain that way for the foreseeable future, now for you other question can you lose more than what you invested in a particular coin? And the answer to that is it depends, if you are only buying or selling without using leverage then the answer is no, you will only lose the capital you invested in it and the warning you get comes from the fact that coingecko is probably legally obligated to put such warning to avoid being the target of lawsuits, however if you use leverage and you do not use a stop loss then you can lose more than what you invested in the coin originally.

[teosanru]

Hi,

I have some experience in crypto trading (far from being a master though).
One question I came across is if there are different level of risks for different cryptos? I know that generally cryptos are like stocks, ie you only can lose what you invest; but obviously there are financial products to deal with leverage etc.

But if we take a simple example: If I just would like to buy some (simple) CEL shares for 1000 $, this would be the maximum I could lose right?
The reason I am asking is that for some COINS, on coingecko there is a disclamer saying 'Highly volatile investment product. Your capital is at risk.' (which is a banner sponsored by etoro,  but it doesnt appear at all cryptos...)

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out? When I was trying to buy a similar crpto on binance they displayed some warning as well which confused me quite a lot...

If anyone could shed some light on this that would be appreciated.

Let me tell you a general notion. There are various types of markets. Spot/future or unleveraged/leveraged. But there generally is one rule. The amount of money deducted from your account at the time of order is the maximum amount you can lose. What I can interpret from your message is that you are confused in 2 things. Number one is the warning on coingecko. I think it might be merely a disclaimer by coingecko implying that they don't solicit you for any trade. While on Binance you might be entering trade from a future/leveraged account. In a leveraged trade you just have to keep the margin amount of your order at time of purchase with Binance and that margin is your maximum loss but Binance will liquidate your position at the liquidation price which means squaring off your position without your approval.

[stomachgrowls]

There is no place legally able to ask for more from you, in places like robinhood which deals with real stocks and margin trading and leverages, they do ask more from you, you could spend more than you invested in robin hood and in other stock market places, you basically take out a debt for investment and not really to yourself so that makes things easier, in the end company only buys stocks and they ask the difference from you instead, and not really put money into your bank account.

So, stock market has what you are afraid of. However in crypto world people do not give their details everywhere, some places ask for your KYC but as long as you do not share your KYC they can't know who you are and that is why they can't charge you anything more than what you put in there.

Well explained buddy!

This is the difference between centralized and semi-decentralized one where crypto exchangers doesnt really have that similar scheme on what we do saw on stocks or forex brokers.

It doesnt matter if you do really deal up with leverage,spot and future kind of trades and as said, the amount that you had only put up is only the amount that you would totally loss here on crypto.

Theres no such thing about having a deep debt since you do make out some leverage or something.Good thing here is that you do able to decide neither to hold or not into your coins
until recovery.

[CASTIEL05]

They displayed the warning sign that your funds is on risk, for us to be aware of what will happen to our funds. It is really obvious that the crypto itself or exchanges are warning us that they hold our fate in trading. Anytime, we may lose. It is your side if you will be lose or win trading. The risk management factor should be consider in trading. It is not as easy as what we are expecting for. Since, trading can give us money and destroy our lives, they always advise the noob for risk that they may encounter.

[ice098]

The majority of the cryptocurrencies bear the same risk except for the stable coins. From the root word, they are stable and serves as the fiat in the crypto market.

Bitcoin is risky and altcoins too.

Defining them by level, they are the same in levels. A good basis is to look at the liquidity or volume of a coin. It will give you an idea if it's going to fluctuate that much by looking at the high daily volume. But if that coin doesn't have that much, just leave it and don't buy it.

So far i didn't encounter such that a level of difficulty when it comes in trading. For me they are just the same, the risk and the difficulty of trading crypto especially when it comes to altcoin and bitcoin. You will feel the same feeling when you are about to trade your altcoin and even bitcoin the only difference between two crypto was your level of fear. So far you would get that fear when you trade bitcoin its due to bitcoin was expensive enough to lost than altcoins.

[CryptopreneurBrainboss]

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out?

Yes if only your aren't engage in other advance trading experience like margin trading. Investing just by trading on spot exchanges or buying of tokens can only cost you your initial funds in case it was a bad investment and market has declined to bring the price down. Do understand that unless the token had been delisted from all exchange or they lack liquidity that prevents your from selling since there's no buyer available, you would mostly have some funds to left in the token.

Cryptocurrencies are subjective to risk, the stablecoin aren't no different since they lose and gain value too although their state of stability gives more assurance than other cryptocurrencies out there including bitcoin.

[onecall123]

Everything has risk can go to zero, you have to deal with risk until you're going with crypto currency trading. I've been in the crypto exchanging business for some time now and I attempted many security estimation to limit the danger but nothing make me happy. I recommend you join a decent trading signal group those are providing good calls for both beginners and experienced crypto traders.

[Salauddin1994]

There are many risks involved in trading cryptocurrencies without skills about business the exchange will be very difficult that's why trading rules and strategies must be followed before trading need to try new information about the market. Knowing the updated information will make it easier to follow the price difference of the currencies also enjoy trading signals protection features that will ensure that your personal data and funds are always protected.

[EdenHazard]

I understand that with speculative cryptos you can lose part of or all of your investment, but is the risk limited to the amount i laid out?

Yes if only your aren't engage in other advance trading experience like margin trading. Investing just by trading on spot exchanges or buying of tokens can only cost you your initial funds in case it was a bad investment and market has declined to bring the price down. Do understand that unless the token had been delisted from all exchange or they lack liquidity that prevents your from selling since there's no buyer available, you would mostly have some funds to left in the token.

Cryptocurrencies are subjective to risk, the stablecoin aren't no different since they lose and gain value too although their state of stability gives more assurance than other cryptocurrencies out there including bitcoin.

A hyper volatile crypto market allows certain coin to go up for 10,000% and go down disappear to the dust. This is actually what most exchange warned about.
A margin trading and its leverage is indeed an advanced trading which it's not for newcomer, op seems have no idea about this though.
He might have heard his friends or colleagues telling him that they lost the whole salary in crypto + seeing those warning messages makes him paranoid.

If you compare it to the traditional market which limited the max loss to certain percentage then crypto is indeed high risk, but if you do understand crypto and had some trading experiences in crypto market.. I'd say the risk is just average.