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Manage Your Crypto Portfolio Like a Pro: How Advanced Tools Can Help to Manage Risk and Volatility

December 23, 2020
A major factor in the popularity and success of crypto trading is the extreme volatility of digital assets. The sudden giant price fluctuations in either direction present abundant trading and arbitrage opportunities that rarely exist in traditional markets.

Steep rises in the bitcoin price that are often followed by equally gut-wrenching drops, making cryptocurrency trading extremely risky. With the help of advanced tools, traders can find success and longevity in bitcoin trading and manage their risk and volatility like a pro. Let's take a look at some of the advantages these trading tools can provide.

24/7 Bitcoin Trading

Unlike trading traditional markets such as equities, cryptocurrency markets never sleep. There is no opening or closing bell, meaning that traders have unlimited opportunities to capitalize on the volatility and intra-day swings that have become the hallmarks of this nascent space. However, without advanced tools or institutional crypto trading products, traders would be unable to manage their risk or maximize their gains.

Advanced tools with fast execution and trading software with innovative algos allow traders to set rules, meaning they can capture trading opportunities around the clock. Sophisticated trading algorithms can be easily programmed according to a traders' risk appetite so that once certain conditions are met, a trade is triggered. 

Not only does this allow traders to avoid hefty losses on a large position when the market changes direction but they can also capitalize on profits they would have otherwise left on the table. They also have the additional peace of mind that trading is without emotions and human error is eliminated. For traders managing large portfolios for clients, tools like this are particularly pertinent.

Buying and Selling with Faster Execution 

In crypto trading, time is of the essence and speed of execution plays a huge factor in successful trade outcomes. Advanced tools allow traders to respond quickly to a volatile market with no more manual trading opportunities slipping away before the order can be placed.

Pro traders with a large fund allocation for institutional crypto trading need advanced tools that allow them to manage their trading strategies more efficiently. They need the ability to buy and sell quickly with fast execution in order to minimize risk and capitalize on crypto volatility.

This is much more easily achieved through a unified execution management system that automatically connects to multiple exchanges, allowing them to realize more effective trading strategies such as spread-trading while ensuring high liquidity. 

Abundant Arbitrage Opportunities

The extreme volatility of cryptocurrencies and the massive price fluctuations of digital assets result in multiple discrepancies in prices across exchanges. This means that for savvy traders, there are abundant opportunities for arbitrage that are automatic and effortless using advanced trading tools. 

An institutional digital asset trading tool such as Access from Diginex, for example, aggregates data from all relevant spot and derivative venues, allowing traders to simultaneously buy any crypto-asset low and sell higher to make simple profits through various arbitrage strategies. 

This kind of capability allows traders to make their crypto assets work for them without having to identify opportunities and execute them manually – and quickly enough to take full advantage. 

Multiple Asset Class Trading

Advanced tools not only allow traders to handle multiple trades and accounts with ease but they can also enable the trading of multiple asset classes from within one integrated solution. Access provides traders with a convenient consolidated portfolio view allowing them to execute more efficient and flexible trades across various classes for a range of clients.

Being able to visualize and manage their entire trading portfolio across asset classes from within one interface with built-in real-time risk and P&L is crucial for managing market exposure. 

Simplified Risk Management

Advanced tools make risk management simple, removing the compliance burden for institutional traders. Thanks to its transparency, Access allows for both risk management and compliance teams to control activity and trading limits via a separate application if they wish. 

This enables both middle office and upper management to build-in a specific risk tolerance level for their institutional clients at a per trader or per portfolio level. Should this limit be breached for any reason, they receive an automated notification and can take immediate action if required. 

Final Thoughts

Advanced tools provided by an institutional-grade crypto trading platform or digital asset exchange allow traders to manage their crypto portfolios professionally and effortlessly. They can capitalize more easily on market movements, take advantage of spread-trading, and manage their risk from within one unified interface that lets them make the most of the frenetic cryptocurrency markets and the abundant opportunities for returns.

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