What are the main risks of trading cryptocurrencies?

Cryptocurrency trading involves several significant risks. Price volatility is extreme—Bitcoin can swing 10-20% in hours, wiping out profits quickly. Leverage trading amplifies losses; borrowing to trade means you can lose more than your initial investment. Liquidation occurs when leveraged positions drop sharply, automatically closing your trade. Exchange risks include hacking, technical failures, or sudden closures. Market manipulation and low liquidity on smaller exchanges can trap traders. Emotional trading—making panic decisions during downturns—commonly leads to losses. Beginners often lack proper risk management, trading without stop-losses or position sizing. Additionally, cryptocurrency markets operate 24/7 with no circuit breakers, allowing rapid drawdowns. Always start small, never risk more than you can afford to lose, and use protective tools like stop-loss orders.