Like most crypto bull markets it looks like a lot of new people have entered into the crypto trading space. I thought I'd write a quick post about decent opsec when using exchanges for trading or at the very least, a simple risk management technique that could save your ass one day. Exchange hacks happen, if you're prepared they don't have to completely ruin you. 

# I make mistakes so you don't have to

![](https://media.giphy.com/media/xTgeIZBUFx7V5H17O0/giphy.gif)

Let's get the obvious out of the way. 

1. Use a strong password.
2. Always have 2FA setup (2 factor authorization).
3. Keep your email secure, change your email password often. 

I'm going to cover more security stuff in future posts and elaborate on these 3 basic things more in the future. For now, let us focus on a simple technique of risk management when using centralized exchanges. 

### Not Your Keys Not Your Crypto 

Truer words have never been spoken. Unfortunately, once you start actively trading you quickly learn this isn't always an easy practice to maintain. You may find yourself with several different coins your trading. For instance if you've bought 25 to 50 different altcoins, maintaining that many wallets becomes a real pain, very difficult to manage over time and not very practical. 

On top of that, these markets move quick and moving that many coins back and forth between private wallets and exchanges can not only become costly with exchange transfer fees, but also costly in missed opportunities as you wait for deposit confirmations and watch as the sudden price movement starts to drop along with your trading opportunity. Not to mention all those deposits and withdrawals can become an accounting nightmare at tax time. 

### What To Do? 

There really is no easy solution. It's a real dilemma. You can have the best opsec in the industry to protect your account but if the exchange itself gets hacked, there's really nothing you can do about it. Prepare to lose everything or at the very least get caught in a legal entanglement that may take several years for you to recover a fraction of your coins from. 

Early on I got so lucky. I exited the Cryptsy exchange about a week before they made their issues public. There was one other exchange too that I can no longer remember the name of but remember it was a close call. Missed that one by a couple weeks as well. 

I always knew that sooner or later my luck was going to run out and eventually it did. I got caught up in the Cryptopia hack, lost about a half a BTC there :( and also lost a small position at Livecoin this past December. Lost a nice chunk of DOGE to Livecoin... That was a costly mistake now! 

### Why Am I Still Here 

Exchange hacks are a risk we all take. I always knew it was part of the game. From the start I told myself it was just a matter of time till it happened to me. The only way to survive this type of situation is to make sure you're not completely REKT at the end of it. **YOU HAVE TO LIVE TO FIGHT ANOTHER DAY**

### Take Cash Gains and Save Them Somewhere Safe 

I have several things I do to make sure I do indeed live to fight another day. One thing is to take those cash gains. Set up a small savings or checking account that is only used for trading funds. When you start getting heavy unrealized gains, cash out a little and put the funds in your cash account for trading. Don't leave the funds on exchanges, there really is no reason for doing this unless you're unbanked. 

### Keep Large Positions In A Private Wallet 

Any large long term positions should be kept in a private wallet. This will also show you how well the tech you're invested in works. One of the first things I do when I look into a coin is look at wallet options. If there's not a working wallet or it seems like storing the position could be an issue, I won't even get involved. Trade enough shitcoins and eventually you'll come across some pretty crappy wallets. AVOID THOSE AT ALL COSTS! 

This isn't always easy if you swing trade a lot. You need your coins on exchange to trade the volatility and chop. Still, in most cases there is never really a reason to keep your entire position on exchange. 

Keeping small shitcoin positions on exchange for trading is one thing. Keeping monster investing positions on exchange is just stupid. If you're not trading it regularly, find a safe place to store it even if you're just using a paper wallet. 

### Use Multiple Exchanges 

This is my saving grace! The chances of every exchange getting hacked on the same day is probably pretty low and highly unlikely. Split your trading positions up between multiple exchanges. If one exchange gets hacked, it sucks, but it's not the end of the world. You still have partial positions on other exchanges. You live to fight another day. It sucks that you have to eventually try to make up for those losses, but regardless, you're still in the battle. You're still alive and most importantly you still have a trading position. 

Let's say you have a half of a BTC worth of altcoins. Split them up between several exchanges and split the positions up between the exchanges as well. This can also help when there are arbitrage opportunities. If you have coins on both exchanges just sell the coins on the higher priced exchange and buy them back on the lower priced exchange, then transfer the positions around after the money is made. THIS IS FREE MONEY AND I LOVE WHEN I'M PREPARED FOR THESE OPPORTUNITIES. 

 Another thing I avoid is coins that are only listed on one or two exchanges. If I can't split the position over multiple exchanges, chances are, I'm not getting involved. It's one thing if you're buying into a new project, but if your coin is several years old and only on 1 or 2 exchanges I want nothing to do with it. A simple delisting will completely destroy a coin that's only on a couple of exchanges. INSTA-REKT! 

### Final Thoughts 

My biggest piece of advice to anyone just starting out trading shitcoins is to get on multiple exchanges. Split your trading positions between those exchanges and try to keep a little cash available for rainy days and there will be a few rainy days. With a little risk management you can survive an exchange hack. When all is said and done, never put yourself in a position of "all or nothing". Trading can be easy and lucrative at times, but a small mistake can leave you ruined. Although exchange hacks are inevitable and part of the trading game, with a little risk management they don't have to be fatal or career ending! 




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