2023-04-05 12:59:33
How to Protect Yourself Against Crypto Market Manipulation?
1. Research and Multiple Consultations
Do your research before trading by confirming prices from different reliable sources. Using multiple crypto exchanges, you can compare assets’ prices and data for relative relatedness. For example, if a price is pumping on one exchange, cross-checking against another can reveal the true price and help you avoid a rug pull or pump and dump.
2. Study Historical Trends
The trend, they say, is your friend. Historical trends offer precision in trading as the data can be consistent and reliable. Bad actors often prey on recent market trends but may find it difficult to distort historical trends. Trading based on prevailing trends could help reduce the rate at which market manipulation affects prices—manipulated trends don’t last.
3. Always Follow Your Trading Plan and Risk Management Practices
Following a trading plan can save you from trading based on impulse and social media hype. Your trading plan should include your guidelines for executing trades and risk management strategies. With this in place, you can trade based on a predetermined market condition.
This is not to say this can make you totally immune to market manipulation. However, it will put you in a better place than someone trading on impulse.
4. Opt for Long-Term Investments
Most market hypes are short-lived, and those who HODL their crypto do not experience whatever adverse effect short-term traders experience.
5. Use Trusted Exchanges and Coins
Make sure to trade on trusted exchanges that have a good reputation. New exchanges and coins with less trade activity are usually susceptible to market manipulation. This is not to say that attackers cannot manipulate market prices on exchanges with large trade volumes; they are only reduced compared to newer exchanges.
6. Diversify Your Portfolio
Considering the issue of market manipulation, putting all your eggs in one basket may not be a good idea. Studying different crypto asset prices to get predictive patterns from how they behave to diversify your portfolio is a good idea. Doing this does not only help you reduce the effect of possible market manipulation; it also helps to mitigate investment risks.
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