Not your keys not your coins for traders

[shinratensei_]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

I lowkey don't really use centralized exchange after perpetual dexes are a thing, hyperliquid and others have close to 0 bps difference to centralized exchange these days, absolutely no reason to use centralized exchange if you want to trade yet you don't want the hacks and the custody. By doing this I already avoided possibility of losing money by hacks and it's very convenient because I can arbitrage on-chain fast by withdrawing directly. Centralized exchange is outdated. Dividing to several accounts also pain in the ass when trading perpetual, always need to move around capital to avoid liquidation so I only used one account.

[Awaklara]

I use two to three exchanges but I don't keep dollars on the exchange because I was caught by KuCoin last year and this exchange is holding my money. So far I haven't been able to withdraw my money, so I keep my money separate from all these exchanges. I deposit dollars for the time I will be trading, and when I finish trading I withdraw all the money and bring it to my wallet. I use this strategy because I don't want my money to be at risk on the exchange,
so I have been controlling my money this way, maybe people will call me stupid because it costs money to deposit but I don't care about this cost. I have planned to lose my new money but not to lock up my entire capital.

That is not a foolish step, but it indeed should be like that. Withdraw your trading funds when the trading matters are finished, that is your money. If you leave your funds on a centralized exchange, you cannot yet count them as profit. 
Just use the funds that you have already budgeted for trading. Whether using only one or two exchanges. Leaving them on the exchange is certainly not a good option, even though some traders do it to make the whole process easier.

[SilverCryptoBullet]

That is not a foolish step, but it indeed should be like that. Withdraw your trading funds when the trading matters are finished, that is your money. If you leave your funds on a centralized exchange, you cannot yet count them as profit. 
Just use the funds that you have already budgeted for trading. Whether using only one or two exchanges. Leaving them on the exchange is certainly not a good option, even though some traders do it to make the whole process easier.

It's not only about profit but also more important about your initial trading capital.

Reminder: do not keep your money in online accounts.
Events made you scare about custodial wallets, centralized exchanges.

When traders fund their accounts on centralized exchanges, they started to have risk of losing their initial trading capital. It's the same if later by trading they have profit with their accounts but don't withdrawal profit and initial trading capital to their non custodial wallets.

No private keys, no controls, and funds can be lost to the exchanges if they scam exit or to the hackers and if exchanges won't compensate users.

[jcojci]

My prevention is only use the money I can. I never use more than $100 in one exchange maybe only less than $50. I am okay with small profit because I don't chase a big profit in a single trade so I can use small amount to do future trading.

I really realize about not your keys, not your coins so I limit my amount in all exchanges I used. I don't want to get the hack or other bad experiences. I kept my big asset in separate wallet and not use exchanges storing my coins.

Other people might use different methods to trade or storing their coins. So we should choose the way that we feels comfortable.

[savetheFORUM]

I believe you have make the best decision so far that's only if the fund you are splitting among many exchanges is mainly your trading capital, but if that's not the situation then tactics won't help you to reduce the chance of losing too much during exchange hack.
You might be lucky things are working for you, having a narrow escape from the previous exchange you're using that experienced a hack

It is not always when the exchanges are hacked. I think it might happen once in a year or even further. That might be the reason why people still prefer storing funds on exchanges even after knowing the risks. Splitting money on multiple exchanges would definitely keep us safe from any sudden exchange hack because we will still have accessible funds on other exchanges but let's not forget the transaction cost here. Every time we move money into some other wallet or exchange, we have to pay the fees. Many of us do not really consider fees but sometimes, they eat up our profits and we do not even know that.

Any user can get lucky once or twice but not always. We never know what's coming next. Even if the exchange is not hacked, there might be a number of other issues which might include strict scrutiny from the authorities which might lock the funds for a meanwhile. I want to have full control over my funds so I would never use exchanges to hold my life savings.

[DanWalker]

I lowkey don't really use centralized exchange after perpetual dexes are a thing, hyperliquid and others have close to 0 bps difference to centralized exchange these days, absolutely no reason to use centralized exchange if you want to trade yet you don't want the hacks and the custody. By doing this I already avoided possibility of losing money by hacks and it's very convenient because I can arbitrage on-chain fast by withdrawing directly. Centralized exchange is outdated. Dividing to several accounts also pain in the ass when trading perpetual, always need to move around capital to avoid liquidation so I only used one account.

Can't deny Hyperliquid and some other perp DEXs are creating some real competition for CEXs.

But using a DEX doesn't make risks disappear. You're just swapping one type of risk for another. With DEXs, you still have smart contract bugs, bridge risks, oracle manipulation, or worse, a leaked private key. And if you lose your money because of any of that. There is pretty much nobody to compensate you or help get it back.

CEXs still have their own advantages, like deeper liquidity and way more trading pairs. Their service are also a lot more diverse. It's not just spot and perps.

DEX are giving people another option. But they do not remove the risks and make CEX outdated.

[BitBakerr1]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

I don't believe it's just luck but it all about your strategy and how long you spend in the market, when you don't spend too many hours or days then the chances of your trade still being on when the hacks happens are slim. A trader that spends just few hours and always withdraw after each trade for that day isn't going to have much or anything left on the exchange to lose them to hacks. I also have being in what you called a lucky situation because I had accounts with platforms that were hacked but I didn't lose any money. I know it's advisable to keep some money on exchanges to avoid losses over time from withdrawal fees but I don't mind paying for those fees instead of leaving my money on any CEX especially when I know I can't risk losing that amount. So my strategy is always take short trades, withdraw and hold in my own wallet.

CryptopreneurBrainboss That strategy is the best strategy, if you don’t leave your money in an exchange, you won’t have any problem with the exchange being hacked.
When you are done for the day, the next thing you should do is to withdraw all the money that is left in that exchange so you won’t fall into a situation of losing your money.

But talking about hack, I have not actually seen a situation where a hack happens to an exchange and the exchange totally close down and customers loses their money, it may have happened but I have not actually seen.
The one that happened to Bybit people didn’t lose there money totally, this one that recently happened to Bitget I’m closely watching them to see if they will come back because right now they have suspended withdrawal.

[Asiska02]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

Signing up on an exchange as a means of savings is not the best approach, and thinking about how much you could lose in case of a possible hack on an exchange is not also what should be in mind. The exchange should strictly be for trading and exchange of coins, diversifying your portfolio is not in essence really bad if it works for you well but I won’t use that as a means of reducing the amount to be lost in terms of hack.

When I am trading and hit a profit, I take profit and not leave my wins in the exchange. I always have an amount set aside for trading and only that amount is deposited to trade with in an exchange, I take profits from that initial deposit and when I’m in loss or liquidated, I don’t add more money until that amount set aside for trading is replenished again. So I don’t really gamble much and leave my savings in exchange.

[Oshosondy]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

Signing up on an exchange as a means of savings is not the best approach, and thinking about how much you could lose in case of a possible hack on an exchange is not also what should be in mind. The exchange should strictly be for trading and exchange of coins, diversifying your portfolio is not in essence really bad if it works for you well but I won’t use that as a means of reducing the amount to be lost in terms of hack.

This is not the question that I asked unless you direct it to yourself and not an advise for me. I am not seeking for your advice, but I just want to know how other people are trying to reduce their losses on exchanges if the exchange got hacked. I did not post that I am saving on an exchange which make you get the whole thing wrong. Just post you opinion about how you can avoid losing money on exchanges during hack is the question.

[OsaiEmma]

But, isn't this setup of your's stressful and tedious? Juggling different accounts amongst different CEXs isn't something I can handle, honestly. If I get to a point where I feel unsafe keeping my funds in a particular CEX or CEXs in general, I'll simply quit trading.

It actually takes alot to be splitting up funds into different exchanges. Sometimes you also lose them by yourself as a result of bad trade because you are likely and or probably going to be trading those accounts simultaneously. In such case, if a trade goes bad in one account, it is likely going to affect the other account. It means you will eventually lose that which you are trying to safeguard from incident of all the funds being affected by hack. It is better to reduce the risk by transferring an amount you can lose one time and when you want to refund you do that at a lesser amount. This, the risk is still high with splitting funds and diversifying through different exchanges.

But the good part is that if you are profitable, you may also gain from all the accounts if you are trading them simultaneously and same pairs.

I'm not even talking about the profit/loss here. If you're using the same leverage and the trading fee is the same, there is no difference in putting your funds in a single or multiple trading account(s) in terms of profit/loss. In fact, it's even more of a disadvantage because you'll have less margin buffer for SL. Just too many reasons to frown at this type of setup.

I don't think he trades at all the exchange the same time. He's just managing his asset with basic risk management instead of going all in one exchange. But to be honest, whether trading at all or not, managing too much exchange accounts would be stressful for me too.

If he doesn't trade all at the same time, that's even more tedious, especially if maybe you're trading on different pairs. You have to be looking out for news, making more analysis, etc. As he said earlier, he trades grid which is somewhat automated in most CEXs—that's the only way I can understand how he manages those multiple trading accounts.

I understand his concerns but all exchanges are the same. I would rather move out my coins to a more secured wallet after trade if I'm scared of exchange hack instead of having them divided in multiple exchanges accounts.

IKR, I'd just quit if I started getting this paranoid—guess we're all built differently.

[lionheart78]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

To reduce the chance of losing too much money on exchanges during the possible hack is to minimize the amount to store on centralized exchanges much better if we empty out our exchange accounts when we are done using the platform.

In case of an exchange hack and we have our funds in the exchange, i do not think there is anything we can do if the hacker had already emptied out our account, but if we are talking about individual account hacking, I think setting up layers of security like activating both email OTP, 2fa and if possible sms OTP and required all three to access the account plus activate passkey together with the other layer of security to engage in trading, and fund transfers can help make the account hacking harder.

[crwth]

I like how you handle it because it's a solid approach to reducing your risk of exposure to the coins you hold.

In my approach, I usually do a delta-neutral type of trade in which i open a long position on one exchange and then a short position on another. They cancel each other out, and I just let them run their course, and then i close another position and wait for the other one to recover.

This doesn't always work, but it could; it's not an ideal strategy in my opinion. So at least if one exchange gets hacked, I still have the other one

[Wiwo]

In term of security in case of hack incident, dividing your trading asset's across multiple exchanges seems to be a helpful step even though not an entirely secured step it allow you to escape total loss of access to your funds.

What I find contradicting is the statement where you open low leverage trades for up to 3 different exchanges using single asset piar.

My confusion is trying to know you handle the risk when the price of the asset goes against you, it means you be losing same amount 3x on all your active trading account at the same time.

[M47AK16]

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

That is good for you and you know what you are doing. To me, it's not so complicated at all, I only deposit if ever I buy and that's why I don't get to keep some funds in exchanges. I think that I still have some left in there but they're just the dust amounts that I can no longer move and even convert in some stable coins. I've learnt in the past incidents of these exchanges that any amount of fund could be at high risk when deposited on them.

Even I prefer to only use exchanges if I want to buy something. For regular investments or holdings, I would never trust these exchanges because past has taught me that much. We have seen some reputed exchanges go down with investors money. I don't want to be the one waiting in queue for my money to come back after the authorities step in. I would avoid such scenarios at all cost and for that, storing money in wallets where I own the keys it the best possible solution for me.

I mostly use exchanges either to invest money or withdraw profits. This is instant because once I have the cryptos on exchange, I would immediately move them to my wallet where I want to invest. For withdrawing profits, I get the money straight in my bank account so that still works for me.

[leonair]

I don't trade grid, I trade futures and sometimes spot; so...I really don't like diversifying the trading platform I use. Most Centralized exchanges do have a safe mechanism for hacks because that's something that can happen at any time. Most recent cases of hacks on CEXs saw those CEXs refunding some parts or all of their users' funds. Because of this, I'm not that bothered or paranoid about hacks while trading—that'll add another layer of stress to trading itself.

But, isn't this setup of your's stressful and tedious? Juggling different accounts amongst different CEXs isn't something I can handle, honestly. If I get to a point where I feel unsafe keeping my funds in a particular CEX or CEXs in general, I'll simply quit trading.

CEX is a very good option for trading. I also trade on CEX because it is difficult to monitor price movements accurately on DEX and it is also troublesome to sell immediately. Futures trading is very risky, but I mostly do futures trading with small leverage because here you can trade in both up and down directions. If I ever want to exchange the coins I hold in my personal wallet for other coins, then I need to use DEX. DEX is not for everyone, most traders feel more comfortable using CEX. However, sometimes there are cases of CEX being hacked, recently Bitget was hacked, so it is better to refrain from keeping large funds on CEX.

[RockBell]

Even I prefer to only use exchanges if I want to buy something. For regular investments or holdings, I would never trust these exchanges because past has taught me that much. We have seen some reputed exchanges go down with investors money. I don't want to be the one waiting in queue for my money to come back after the authorities step in. I would avoid such scenarios at all cost and for that, storing money in wallets where I own the keys it the best possible solution for me.

Exchanges are are meant to buy just the way you explained it and it's better not to trust exchanges with your holdings because we know what can happen to exchanges, you can buy and then transfer it to a wallet, and the wallet gives you that confidence about the safety of your money so that there will not be complications about an exchange been hacked and some people are just lazy and thatbis why they buy and the same time they leave there money there, to aviod unnecessary things just buy and keep in your wallet that will safe anyone a lot.

I mostly use exchanges either to invest money or withdraw profits. This is instant because once I have the cryptos on exchange, I would immediately move them to my wallet where I want to invest. For withdrawing profits, I get the money straight in my bank account so that still works for me.

Yeah it's suitable for those that trade that are consistently making money and the sake time taking profits, they don't even keep a huge amount they just keep what they want to us for trade, and then withdraw there profits because after a successful trade what is next is for you to make withdraw and continue.

[suzanne5223]

I believe you have make the best decision so far that's only if the fund you are splitting among many exchanges is mainly your trading capital, but if that's not the situation then tactics won't help you to reduce the chance of losing too much during exchange hack.
You might be lucky things are working for you, having a narrow escape from the previous exchange you're using that experienced a hack

It is not always when the exchanges are hacked. I think it might happen once in a year or even further. That might be the reason why people still prefer storing funds on exchanges even after knowing the risks. Splitting money on multiple exchanges would definitely keep us safe from any sudden exchange hack because we will still have accessible funds on other exchanges but let's not forget the transaction cost here. Every time we move money into some other wallet or exchange, we have to pay the fees. Many of us do not really consider fees but sometimes, they eat up our profits and we do not even know that.

Any user can get lucky once or twice but not always. We never know what's coming next. Even if the exchange is not hacked, there might be a number of other issues which might include strict scrutiny from the authorities which might lock the funds for a meanwhile. I want to have full control over my funds so I would never use exchanges to hold my life savings.

Even when the incident happens once a year, it is never ideal to store funds on exchanges for the long term, even if the funds are split into many exchanges, and I don't see any reason why it will save anyone from a sudden exchange hack unless you're referring to it minimizing the amount of crypto people will lose through the hack.
The transaction cost should be an issue based on the level of the mempool now, and using $0.5 for a large output will easily get confirmation.

[Tamaperdana]

Snip

These are the ways I have reduced the probability of losing too much money on exchanges. I want to see your own opinions of what you are doing to reduce the chance of losing too much money on exchanges during hack.

Honestly, I'm not sure if that's the case. Because if it's about money on an exchange specifically intended for trading, it's clearly very unsafe, especially if the exchange is hacked. So, to anticipate this, I personally don't keep funds on the exchange for too long. After I trade and make a profit, I usually immediately withdraw the money to my personal account, leaving only a small amount for the next trade. So, basically, my capital is safe and I've made a profit too.

So, the money I keep on the exchange is leftover money. Therefore, if something happens to the exchange, I won't be too worried. Because it's just leftover money. That's my version of securing my money on the exchange. For me, it's easier and simpler than having to split it across multiple exchanges. So, basically, once I make a profit, I withdraw it immediately, which is safer. But of course, everyone has different methods for this.

[OcTradism]

Honestly, I'm not sure if that's the case. Because if it's about money on an exchange specifically intended for trading, it's clearly very unsafe, especially if the exchange is hacked. So, to anticipate this, I personally don't keep funds on the exchange for too long.

With centralized exchanges, there are some biggest risks.

Hacks.
Scam exits.
Bankruptcies.

Among these three biggest risks, I consider scam exit is most dangerous because with this exchange death type, users will surely lose all money. With hacks and bankruptcies, it is case by case, and users will still have chance of getting their fund back, fully or partially.

After I trade and make a profit, I usually immediately withdraw the money to my personal account, leaving only a small amount for the next trade. So, basically, my capital is safe and I've made a profit too.

It's your good practice even it costs you more in withdrawal fees and on chain transaction fees for deposits to exchange accounts.

[WatChe]

Even I prefer to only use exchanges if I want to buy something. For regular investments or holdings, I would never trust these exchanges because past has taught me that much. We have seen some reputed exchanges go down with investors money. I don't want to be the one waiting in queue for my money to come back after the authorities step in. I would avoid such scenarios at all cost and for that, storing money in wallets where I own the keys it the best possible solution for me.

I mostly use exchanges either to invest money or withdraw profits. This is instant because once I have the cryptos on exchange, I would immediately move them to my wallet where I want to invest. For withdrawing profits, I get the money straight in my bank account so that still works for me.

Hacks are very much common with CEX, latest is Bitget losing $387 million due to hack. Whenever such incident happens on any CEX they pause withdrawals, which bring inconvenience for the users. If hack is big then biggest victims are users who may not able to access there assets residing on CEX. One need to keep such things in mind specially if he intends to keep his crypto assets on CEX for longer duration. For trading, CEX is good  option because you are getting live view of price charts but for long term you must keep your Bitcoins in decentralised wallets, where you have complete control of private keys of your coin.