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As an emerging and continually evolving sector of the financial markets, cryptocurrency

offers huge potential to traders of all levels. Only a few years ago, crypto trading was largely limited to the spot markets, with little opportunity to short trade and profit from bear markets.

These days, cryptocurrency traders can choose from an array of different ways to gain exposure to digital assets. Cryptocurrency futures are booming, with open interest having reached an all-time high in late August. Options are also a fast-growing market, while decentralized finance has opened up a whole new sub-sector of yield farming.

However, no matter how you choose to trade or invest in crypto, a certain amount of risk is inevitable. Therefore, rather than getting blinded by the possibilities of profits, the most successful traders focus on how to mitigate the downside. The best way to do this is by making use of the multitude of trading tools available, either via exchanges or via external sites.

Exchange trading tools to offset risk

In the 24/7 cryptocurrency markets, where volatility is the norm, it can be a risky proposition to walk away from an open position. A flash crash or sudden price spike could wipe out your profits in seconds. Therefore, many exchanges offer conditional ordering, enabling you to configure an optimal exit point where youll either take profit or stop loss.

HollaEx is the first open-source exchange that gives traders the ability to make their own order warning pop ups that will trigger when a trade goes beyond your predetermined set amount. This simple but effective measure helps prevent small typos from turning into big losses.

Phemex is the first exchange to pioneer bracket ordering, allowing traders to place a limit order, with take-profit and stop-loss orders that only become active once the primary limit order is fully filled. They effectively serve as a One Cancels the Other (OCO) order.

A feature like this can help a trader to maximize profits and decrease losses within the same order. It reduces the risk that if they arent keeping an eye on the markets, they may risk missing the optimal exit price.

Perhaps not quite as automated, but in a similar vein, Bybit recently rolled out its strategy alerts feature. This is a customizable feature that will send an alert to users, via the exchanges app, when a particular market event occurs. Along with specific price alerts, it can also notify traders regarding particular market trends, or if theres a turning point from bull to bear markets.

Trading bots

Many traders prefer to go full-on with the hands-off approach and automate their trading using bots. Using a bot can reduce the burden of repetitive tasks, achieve pinpoint precision in timing a trade, and simplify complicated sequences of trades.

Deciding which bot is right for you very much depends on your trading style. For example, if youre trading relatively infrequently and just want a bot to rebalance your portfolio, then Shrimpy is a solid choice.

Its specifically designed for portfolio management and allows you to configure your ideal asset balance. You can set a tolerance threshold for movements, and how often youd like the portfolio to rebalance. It will then automatically buy or sell assets based on price movements to achieve your desired portfolio allocation.

At the other end of the scale is HaasOnline, one of the most advanced automated trading bots. It uses its own scripting language so that traders can design and configure complex algorithms as they wish. Theres also the option to take advantage of the platforms own pre-built bots, and everything can be back-tested before executing in a live trading environment.

If you are looking for a more heavy duty solution, then bitHolla offers a range of liquidity bots that gradually allows big traders to accumulate crypto at the best prices across a range of different exchanges.

Analytical tools

Coinmarketcap might be the go-to aggregator for checking a spot price, but there are plenty more sophisticated aggregators and tools available for traders looking for deeper market insights.

One of the most popular is TradingView, which has become the de-facto platform for charting and technical analysis. With a free account, you get access to basic charting, plus some research and analysis regarding particular assets.

However, more advanced traders are usually willing to stump up the monthly fee for access to extra features. These include the ability to apply multiple indicators per chart, show multiple charts in one window to compare performance, and get rid of advertisements.

Beyond the technicals, many traders also like to keep abreast of news and developments in the cryptocurrency space, which can provide insights into the fundamental factors driving the price. However, there are dozens, if not hundreds of news outlets covering crypto, which is where crypto panic comes in.

Its a news aggregator site that allows you to configure your preferences so you can follow the stories related to assets in your portfolio. It also offers a pro feature giving access to instant alerts about news stories.

With the crypto markets becoming ever-more complex, its more important than ever to pick the right trading tools that work for you. Which ones you choose will depend on the type of trader you are, how much youre willing to spend, which exchanges you like to use, and much more. As with any decision in cryptocurrency, do plenty of research to find a suite of tools that will serve you best.

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A Guide to Cryptocurrency Trading Tools - Legal Reader