The Art of Risk Management: What's your understanding?


PHOTO: personalized Bitcoin Chart 8/22/2014

(SAN FRANCISCO) In the Art of Risk Management, understanding levels of security define success and failure. In financial matters, exchange liquidity is a major factor in defining security. Although many factors define liquidity, exchange liquidity generally refers to volume, order efficiency & market capitalization. The ability to fill orders quickly in a fast moving, volatile market is key whether you are a trader or investor. Without sellers or buyers with orders to fill, price fluctuations effect profits and create an unreliable marketplace. The CryptoCurrency market is not immune to this age-old maxim.

Lets take a look at the three factors:

The following exchanges currently dominate the CryptoCurrency markets, by fiat currency type:

CNY (Yuan) – OKCoin, Huobi & BitFinex

USD (US Dollar) – Bitstamp & BitFinex

EUR (Euro) - Kraken

Currently, the majority of trading volume occurs in China. The Chinese government is adopting Litecoin as the digital complement to the Yuan; China’s national currency. OKCoin, predecessor of the Mt. Gox exchange, provides the largest daily volume in Bitcoin and Litecoin, larger than all other exchanges combined.

Market Capitalization:

Bitcoin - $6.6 billion

Litecon - $168 million

Dogecoin - $11 million

The argument for Litecoin; The Litecoin blockchain is capable of handling higher transaction volume than Bitcoin, due to frequent block generation. Additionally, Litecoin was designed to grow into a much larger market than Bitcoin.

Litecoin features faster confirmations, improved storage efficiency, ie. Less risk. With substantial industry support, trade volume and liquidity, Litecoin is a proven medium of commerce complementary to Bitcoin, according to

An excellent source for current volume, price and charting is BitCoinWisdom.

As an essential part of your due diligence in the CryptoCurrency markets, always consider volume, market cap and order efficiency in addition to geopolitical news and events. As in all endeavors, know your risk tolerance, how to mitigate/monitor that risk, and manage your portfolio accordingly. Stayed tuned to Market Intelligence and Bitcoin Investor for current information, research and education.

“A fool and his money are soon parted”

- Thomas Tusser

Want to know more about how you can apply these principles to your trading strategies? Take our FREE MBF Trader webinar and trade like a pro! Click HERE for more information.

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