"Liquidity of Crypto Currencies and some risk management strategies are discussed here"

abdullahw2 (73)S4B [MOD]in Steem Alliance • 7 months ago

*Assalam O Alaikum*

Hello Steemians! Well come to my post. How are you all? I hope that you will be doing well by the grace of Almighty Allah. I'm also fine and enjoying my day. Today I'm here to share my knowledge about "Liquidity of Crypto Currencies and some risk management strategies" in this Steem Alliance community. So let's start without any more delay of time.

Created With Canva

*What is the liquidity of Crypto Currencies?*

Friends in the world of crypto currencies the liquidity is a very important concept as it affects the market volatility and the trading activities of digital currencies. Basically the liquidity means that how easily a digital asse can be bought, sold and then exchanged within the crypto market. It varies according to the market condition such as market volatility, volume of trading and other activities within the crypto market. The ratio of liquidity also depends upon the digital currencies and every digital currency have Different liquidity ratio as compared to other one.

Pixabay

If we talk about some major crypto currencies such as Ethereum, BTC and other they usually have higher ratio of liquidity as compared to other crypto currencies and lt coins also. Usually if a crypto currency have more buyers and sellers in the crypto market then the trading volume of that crypto currency increase which also increase the liquidity ratio of that currency.

Also the crypto currencies which are listed on many trading platforms offer a high level of liquidity to the buyers and sellers of that specific currencies. The reason is that due to easily availability of crypto currencies on different exchanges the people can easily buy, sell and trade their favorite digital currency which has high level of liquidity.

*Some Risk Management Strategies to deal with liquidity*

Friends as we all know that the crypto market is highly fluctuating and volatile due to this most of the time we remain unaware about the sudden happening in crypto market. In this regard where the liquidity of Crypto Currencies offer benefits there also it contains many disadvantage which may put many negative impacts on crypto currencies. So it is very important for us to learn how to deal with uncertain liquidity of Crypto Currencies.

Pixabay

1. First of all never invest all your money in only one digital currency and its trading. Always invest your money in more than one crypto currencies as if one digital currency is facing low liquidity due to market sentiments than you can get benefits from other currencies in which you have invested.
2. Keep any eye on the trading volumes of different crypto currencies especially on that in which you have invested. This is because usually high trading volumes offer high volatility and if we witness any decline in trading volume then you should understand that it is an alarm regarding the decrease in liquidity of that specific digital currency.
3. Always keep on eye on every lastest happening in crypto market and stay connected with the updates and other things related to crypto market so that you can do some safety measures to deal with liquidity and other downs in crypto market.

4. Never forget to implant stop loss orders in the crypto currencies which you are trading. The reason is that the stop loss orders will help you to get informed about the decline in prices of crypto currencies and also save you from loss.

*Conclusion*

In conclusion, the liquidity has a huge impact on digital currencies and where it contains benefits there also it contains disadvantages which may lead us towards a huge loss. So I thought it is important to inform everyone about liquidity of Crypto Currencies and how can we deal with it. I believe through that post you will easily understand about the concept of liquidity and through these points you can easily deal with it and can manage your assets. So now it is a time to say goodbye till the next article.

Written by @abdullahw2

Green Elegant Best Friend Happy graduation Congratulations Card.gif

Thanks All ❤️

#steemexclusive #pakistan #club75 #cryptocurrency #steem-alliance

7 months ago in Steem Alliance by abdullahw2 (73)S4B [MOD]

Sort:

steem.history (78) 7 months ago

Thank you, friend!
I'm @steem.history, who is steem witness.
Thank you for witnessvoting for me.

_{please click it!}

_{(Go to https://steemit.com/~witnesses and type fbslo at the bottom of the page)}

The weight is reduced because of the lack of Voting Power. If you vote for me as a witness, you can get my little vote.