What are the main risks associated with digital markets?

Digital markets carry several key risks. Volatility risk occurs because cryptocurrency prices can swing 10-20% in hours. Liquidity risk means you might struggle to sell large amounts without affecting prices. Leverage risk amplifies losses when trading with borrowed money—a 10% price drop can wipe out your entire investment. Exchange risk involves platform hacks or failures; Mt. Gox lost $470 million in Bitcoin. Regulatory risk stems from changing laws that could restrict or ban cryptocurrencies. Technical risk includes smart contract bugs in DeFi platforms. Counterparty risk happens when relying on third parties to hold your assets. Beginners should start with small amounts, use secure wallets, avoid leverage, and diversify holdings to minimize potential losses.