Summary

When buying and selling cryptocurrencies, you should prioritize whether the transaction is safe and reliable. The vast majority of responsible trading comes from proper planning, and developing a trading plan can help you be responsible for subsequent investments.

Keeping a clear head when making decisions can avoid emotional trading. You should also consider doing your own research, diversifying your investments, using limit-price and stop-loss orders, and combating the fear of missing out (FOMO).

If you participate in leveraged trading, you must fully understand the risks involved. The features launched by Binance also include guiding users to effectively control transaction limits, such as setting a cooling-off period. This option allows users to lock contract accounts for a fixed period of time.

Introduction

This feature is an excellent way to ensure safe and reliable transactions regardless of the transaction amount. . You just need to follow simple tips and methods to eliminate unnecessary risks and ensure that you do what you can when trading. Some people easily lose their minds when trading. To learn how to optimize your trade management, read our guide to determine trade limits and trade more responsibly.

What is responsible trading?

Trading cryptocurrencies responsibly goes beyond just paying attention to the amount you buy and sell. You should take control of your trading behavior and stay away from emotional trading. Traders must be responsible for their personal actions and understand whether trading can truly benefit them.

There are many ways to invest or trade cryptocurrencies. Alternatives such as contracts and margin trading can lead to greater returns through leverage, but come with increased risk. Some traders find it difficult to use these investing methods responsibly. Buying cryptocurrencies on the spot market and holding them for the long term is safer and better suited to one's personal risk profile.

Responsible traders stay away from behaviors and activities that lead to irresponsible trading. A big part of trading crypto responsibly is being aware of the circumstances under which decisions may be negatively impacted. This technique requires time and experience, but novice traders are generally prone to impulsiveness or prefer to trade based on intuition. The more you can avoid this, the better.

How does Binance help users trade responsibly?

Binance takes a responsible approach to providing training and guiding users on best practices. In launching a responsible cryptocurrency product, Binance was also the first cryptocurrency exchange to require users to pass a trading functionality test. Binance Academy also offers free consultations and actively educates millions of readers around the world on how to invest and trade more safely. Readers looking to invest in the cryptocurrency space can also refer to Binance Research’s in-depth, objective and unbiased reports.

Binance has also launched a variety of anti-addiction features to help traders who may be at risk. For example, if losses continue, Binance will suspend trading. This feature can curb impulsive trading behavior. This is just one of the ways Binance takes responsible trading seriously.

Please visit our dedicated Responsible Trading page to learn more.

8 tips to help you trade cryptocurrencies responsibly

Trade cryptocurrencies responsibly Users are required to manage many aspects of their trading behavior. It does not simply start with clicking "Buy", nor does it end with clicking "Sell". Try to incorporate the following tips into your daily transactions as much as possible. These tips may seem dizzying, but they can really help improve your trading skills.

Ensure the security of trading accounts and wallets

Before trading, the most important thing is to ensure the security of your account . No matter how responsibly you plan your trading, all your efforts will be in vain if your funds, accounts, and passwords are at risk. Security measures include two-factor authentication (2FA), setting strong passwords, and whitelisting withdrawal addresses. We compiled 15 Tips to Effectively Secure Your Binance Account to ensure that cryptocurrencies are protected by SAFU (Safe Asset Fund for Users).

If you also use an external cryptocurrency wallet, your private keys should follow the same rules. Do not share your private key or mnemonic phrase with others, keep it as safe as your bank account. Depending on your needs and security level, you can choose a digital wallet from the following recommended Binance Smart Chain wallets. Once you choose your favorite wallet, you can store the remaining funds in a hardware wallet to keep your funds safe.

Make a trading plan

The best way to avoid emotional trading is to make a plan and follow it. In this way, temporary profits, losses, rumors or fear (FUD) cannot interfere with your decision-making. How to develop a trading plan?

The trading plan should list the target trading type, trading conditions, and trading goals. Personal risk profile and trading style will determine trading limits. When formulating a trading plan, you should keep a clear mind and strictly implement it in the future. The trading plan should include the following points:

• How much leverage (if any) you want to use.

• The opening price and closing price of a specific transaction

• The ratio of the maximum investment amount to the total principal

• The degree of portfolio diversification

• Cryptocurrency asset allocation

• Timing to suspend trading (time point, transaction amount, etc.)

• Maximum loss

• The product or asset traded

Use limit take-profit and stop-loss orders

Limits are easy to use on Binance Stop-profit and stop-loss orders for better control of your trading. You can’t stare at a screen 24/7, and cryptocurrency prices are volatile and losses can be unpredictable. Trading large amounts of cryptocurrency without protection in the face of price volatility is irresponsible. Once you have a trading plan in place, you can easily use limit, take-profit, and stop-loss orders and follow them to the letter.

For example, suppose you buy 1 Bitcoin (BTC) for US$15,000, and the current price of BTC is US$40,000. You want to achieve your goal of making at least $15,000 by not selling for less than $30,000 when prices drop. After setting a sell limit, take profit and stop loss order, the system will operate automatically.

First, set the take-profit and stop-loss price to $32,000, which will trigger a limit order. Then, set the limit price to $30,000, that is, if it falls to the take-profit and stop-loss price, 1 BTC will be sold for at least $30,000.

Set the difference between the take-profit, stop-loss price and the limit price to find the best transaction time for the limit-price, stop-profit and stop-loss orders. If no spread is set, the market price may fall below the limit price and the order may not be filled.

Please note that limit price, stop profit and stop loss orders may not be executed. But if the transaction is successfully completed, you will definitely get a price that is in line with your expectations, or even more favorable. Please read"What is a limit price, stop profit and stop loss order?" ”, learn more about how to use limit and stop-loss orders.

Research for yourself

We provide learning and research materials through Binance Academy and Binance Research, but Your analysis shouldn't stop here. Do-it-yourself research (DYOR) means on-the-spot verification and verification of the information collected.

This advice applies to users who participate in token trading and investment through trading platforms and using decentralized finance (DeFi) products. Only you know your personal risk profile and the investment portfolio that suits you best. Before investing and trading, you must fully understand how to allocate funds.

Create a diversified investment portfolio

When formulating a trading plan, a diversified investment portfolio should be constructed to reduce Overall risk. Holding only one or two assets in your portfolio carries higher risks. The ideal solution is to invest in different asset types to diversify your portfolio.

When investing in cryptocurrencies, you can first clarify your asset allocation. Investment projects include DeFi, liquidity pools, equity pledges, derivatives, stablecoins and altcoins. Diversifying your investments into a single cryptocurrency type can minimize huge losses. For example, investing in a liquidity pool may suffer impermanent losses, but the losses can be offset by staking gains.

You can then diversify across different asset types. You can hold stablecoins such as BUSD, USDT, and PAXG to further reduce the overall risk of your investment portfolio. Here are just a few examples. There are many responsible ways to plan a cryptocurrency portfolio.

Avoid FOMO

Fear of missing out (FOMO) is a common psychological state among many traders. We must be wary of the negative impact this bad psychology has on trading. The fear of missing out can lead you to abandon limits and investment plans and make hasty decisions. Today, we have access to a wealth of information via the Internet, social media, and other communication media, making us extremely susceptible to influence.

When searching for high-quality investment opportunities online, you must be wary of criminals with ulterior motives. Some users have ulterior motives and hype their tokens or projects, regardless of their true value. Scammers will use FOMO psychology to control traders' emotions. If you feel like you've missed out on an opportunity that you've never heard of before, take some time to research the project in depth before taking the plunge.

There are many reasons for FOMO. Recognizing these causes can help you find triggers for this emotion.

• Social Media: Twitter, Telegram, Reddit and other social platforms are full of rumors, false information and illegal elements. You should always do your own research (DYOR). The platform pays to invite many influential people to promote projects and altcoins, and criminals take advantage of the opportunity to use FOMO to defraud funds.
• Profit: If you are consistently profitable, it is easy to become complacent about the risks of investing. You may also be overconfident in your skills and make poor choices. Even if you have already made considerable profits, this will aggravate the FOMO mentality when facing other "big" investment opportunities.
• Loss: Trying to recover losses, leading to increased FOMO. You may even exit the position due to losses after opening it, only to re-enter due to FOMO. Both situations can lead to compounding losses.
• Rumors and rumors: Getting information from other traders or through the Internet can make an investment more attractive. However, neither rumors, investment advice, nor recommendations of popular cryptocurrencies can replace solid research and analysis.
• Volatility: Severe ups and downs can create profit opportunities. Whether you invest in the hope that prices will rise or you short the cryptocurrency market while the prices are low, it’s easy to get carried away. You might also view a bear market as an investment opportunity, but end up stuck catching a flying knife.

Understand leverage

The plan of borrowing funds to participate in margin or contract transactions and earn huge profits is indeed tempting, but this will also expose you to forced liquidation and loss of principal. Risk of losing your money quickly, as your losses will also be doubled. If the limit is not exceeded, forced liquidation is not necessarily a bad thing. However, if you lose more than planned or risk a large amount of money, this is irresponsible trading. Before using a lever, you must have a clear understanding of how it works.

You can think of leverage as a multiple. For example, 10x leverage means multiplying the initial principal of US$10,000 by 10 to get a trading capital of US$100,000. Your initial capital will be used to offset losses. Once the principal is exhausted, the trading platform will force liquidate the position.

Leverage trading may be abused, and its risks are quite high. Please be sure to carefully study currency-based contracts and U-based contracts to fully understand the risks behind them. Binance also protects new users by limiting leverage and actively promotes responsible trading.

Set a cooling-off period

In order to guide traders to use leverage responsibly, Binance has implemented Relevant functions are embedded in it to help users control the transaction amount. You can use the cooling-off period to implement your personal trading plan and ensure you trade exactly the way you intended. After turning on this feature, the account can be locked for up to one month. Once the "cooling off period" function is turned on, it cannot be undone before the timer expires.

Summary

Everyone should act responsibly Trading, trading platforms are no exception. Binance carefully guides traders to make the right choice. Whether you are trading digital assets, stocks or commodities, you should always adopt a proper risk management strategy and do your own research. If you are worried, stressed out, or losing more than you can afford due to your trading activities, please contact Binance customer service.