How to protect yourself while trading

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Contents

Paranoid Guide to Personal Security

You might be wondering, “how much money can I make trading Bitcoin or Ethereum?” — but the first question should really be “how much can I lose?”

I wrote this because I want you to protect yourself online and prosper.

Before you start trading, first you need to understand the risks associated with investing or trading Bitcoin, Ethereum, Litecoin, ICOs, and other cryptocurrencies.

This advice is based on paranoia… and the paranoia is based on experience. I have been working in IT for over 10 years, I have personally administrated many public-facing web, email, phone, and database servers, and I am an active participant at DEFCON (the world’s biggest hacker convention every year) so I have seen a lot of things that normal people have not seen. Check it out almost every IP address in the world is constantly being probed by someone.

How do I prevent myself from getting hacked while trading Bitcoin/cryptocurrency?

First, let’s consider this, you might already be compromised. What? Yeah, your computer or mobile phone could already have malware or malicious software on it as you are reading this.

Targets get hacked way before they ever realize they are being owned until it is too late. Commonly, criminal hackers will already have gained and maintained command and control over a system days, weeks, or months before they act on it.

Some people might think this is going overboard, but once again I ask — what is the cost of losing all of your cryptocurrency?

How do I secure my computer?

There is only one way to know for sure that your computer is totally clean of any malicious software — reinstall your operating system. This is especially true if you have EVER had any viruses, malware, strange pop-ups on your computer. This goes for Windows, Mac, and Linux. No OS is safe — especially if you have been using it for some time or migrating all of your data and programs from one computer to the next.

PC Security Recommendations:

  • Get a New Computer or Reinstall Operating System — If you install an operating system yourself, first verify the integrity of your installation media. For instance, you can calculate the MD5 sums of the image you use to install or hire an IT professional to assist you with this.
  • Keep Software Updated — Keep your computer software updated regularly and do not use outdated operating systems. Outdated systems are not updated to patch known security holes and vulnerabilities.
  • Install Security Software — Schedule routine antivirus scans and/or see an IT professional to have your computer fully inspected for trojans, keyloggers, mischievous applications/browser plugins. (There is a comprehensive guide here on cleaning and protecting your Windows PC.) As of April 2020 — Avast Free has one of the best protection rates of all antivirus programs (Source).

Once you are certain that your computer is totally secure, now let’s discuss passwords.

Use Strong and Unique Passwords.

The guidelines for this are very simple, but keeping track of passwords is complicated without a password manager. I strongly recommend getting one. A password manager is an encrypted database that is protected by a single password. This way, you can have a unique password for everything you do online and only have to remember one password.

What makes a password strong?

  • Length — 28+ characters (or whatever maximum length sites allow).
  • Variety — mix of numbers, upper and lower-case letters, and symbols.
  • Uniqueness — every site and service must have a unique password. Do not reuse passwords.
  • Password Managers — Choose and use one. I suggested a few below. You must use a memorable that is 16 characters or more password. This is the only password you have to remember and you use it nowhere else and have never used it anywhere else before. Do not write it down or store it on or near your computer. If you write it down, store it away from your computer and in a place that is private and safe. Be creative, not complicated — one of my friends likes to use lines of poetry for this.

What is the best password manager?

  • PROS: Open-source software. You choose location of storage for your password database. You can store your password database on Dropbox or Google Drive (2FA capable) and access it from any device — Windows, OS X, Linux, mobile phones… If the developers are evil, you still control access to your database. There are also lots of plugins and extensions for security (useful for auditing your passwords) and web browser integration so you can have it autofill fields for you.
  • CONS: A bit janky.
  • PROS: Easy to use. Very slick iOS and OS X app that integrates with browsers and mobile apps, but if the developers are evil or they get hacked, you still control access to your database if you store it on iCloud, Dropbox, or Google Drive (all 2FA capable).
  • CONS: Software is not open-source. The apps for Windows and Android, did not work very well when I last checked.
  • PROS: Supports 2FA. It’s widely used and it has browser integrations.
  • CONS: The password database is stored on their servers. If the developers are evil or they get hacked, you could potentially be at risk.

Use Two-Factor Authentication (2FA) on Everything

What is 2FA?

Two factor authentication is where you need two different methods — usually 2 devices — to login to your accounts. Each web service or software you use might have different levels of 2FA that are offered. Some use text-messaging, but this is weak due to number porting attacks. Most common is One-Time Password (OTP) where a new password is generated every

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30 seconds that you must use in conjunction with your stored password in order to login or access software.

What types of programs or devices are best for 2FA?

  • Authy — Authy is an app that stores your seeds for you on their servers. So convenient (and dangerous). One redditor put it simply “storing the secret in the cloud like that is a fairly significant reduction in the security provided by the 2FA” — Reddit /r/netsec post
  • Google Authenticator — Simple 2FA app from Google that runs on iOS, Android, and Blackberry. If you lose your phone, the only way to get into your account is by using your seed to setup a new app OR by emailing support for your site and begging them for weeks to let you back in.
  • Yubikey 4— If you prefer to have a completely separate state-of-the-art device, then Yubikey is for you. I have read that Google uses these internally because U2F is much better than 2FA, but not all sites support it yet.

What happens if I lose my phone or device that does 2FA?

When you enable 2FA for any site, it is extremely important that you keep a copy of the seed (secret code) that you use to enable 2FA in a secure place. I wrote something about this a few months ago.

How do I enable 2FA?

There are lots of great sites for instructions on enabling 2FA. After you do it the first time, it will make a lot of sense how to do it again.

  • How to enable 2FA on Poloniex — this is very similar for other exchanges.
  • How to enable 2FA on Dropbox — very useful if you store any secure notes or password databases.
  • Useful list of 2FA tutorials — not all exchanges are listed on here, but you can request additions.
  • You can just Google “how to enable 2FA on ”

Storing Cryptocurrency Assets

Where is the safest place for me to store my cryptocurrency assets?

Your cryptocurrency assets are all technically stored in the blockchain. However, the keypairs that prove your ownership and to move and transact with must be stored somewhere. Generally, there are two locations: wallets and exchanges.

What is a cryptocurrency wallet?

A cryptocurrency wallet is a secure digital wallet used to store, send, and receive digital currency like Bitcoin. Most coins have an official wallet or a few officially recommended third party wallets. (Source)

Do wallets store my cryptocurrencies?

Wallets do not store your cryptocurrencies. They do store your public and private keys — AKA key pairs. Public keys (AKA addresses) are like a location on the blockchain to track where assets are owned. This is part of how blockchains prevent counterfeiting — there is a record of where each fraction of an asset was created and where it is owned.

What do cryptocurrency wallets store?

Wallets store your addresses and keys. In order to be able to send cryptocurrency you will need an address for the destination and the source. The source address is programatically locked and can only be used with the corresponding private key. If you want to receive cryptocurrency, create an address. Never share your private keys.

What types of cryptocurrency wallets are there?

Full Blockchain Node Wallet is the most beneficial for the network, the most flexible and also the most dangerous way of managing your addresses.

Light wallet — software that allows you to send and receive cryptocurrencies without downloading the entire blockchain.

Paper Wallet — a keypair written on a piece of paper is the closest thing to cash in cryptoworld. It can be used for storage (not recommended) or as a redeemable coupon — which might work for gifts. As soon as it is viewed by anyone else (even by photo) they would be able to sweep the assets into their wallet and this is irreversible.

Hardware wallet arguably the most secure method. I am not aware of anyone who has ever had their hardware wallet hacked.

  • Examples:Ledger Nano S ,Trezor ,KeepKey .
  • Storing your hardware wallet seed — split it up behind two 2FA services

Backing Up A Hardware Wallet Key Phrase

  • There are many ways to do this and none of them are either completely secure, or simple. My personal approach:
  • Divide your 24-word key phrase into 2 parts
  • Encrypt both of them with any encryption tool available for you, and store encryption keys in 1Password
  • Find 4 storage services which support 2FA: e.g. AWS S3, Google Drive, Dropbox, Github private repo
  • Enable 2FA on all of them, store OTP 2FA seeds in Authy
  • Put first encrypted part of the key phrase into 2 of the services, and another part into another 2 of them
  • With a setup like that your system will have 2 layers of protection: your 1Password master password and your password for accessing Authy. Those will be the only 2 password you’ll need to remember.
  • (Source: Medium)

What is a cryptocurrency exchange?

Digital currency exchanges ( DCEs) or bitcoin exchanges are businesses that allow customers to trade digital currencies for other assets, such as conventional fiat money, or different digital currencies. They can be market makers that typically take the bid/ask spreads as transaction commissions for their services or simply charge fees as a matching platform. (Source: Wikipedia)

Is it safe to store my cryptocurrency on an exchange?

Exchanges are the least secure place to store your digital assets. There are a lot of shady ones out there and they are often hacked. Also, they have daily transfer limits, for instance if you want to extract money.

How do I protect myself while accessing exchanges and accounts online?

Virtual Private Network (VPN)

I recommend using a VPN to conduct any private transactions online. It’s a great way to protect yourself — especially if you are using WiFi in public places like hotels, conventions, cafes, or co-working spaces. You can use all of these services on your computer and cell phone:

Use Stops To Protect Yourself From Market Loss

Many investors and traders do not know how to protect their open positions in stocks, futures, and other securities. Fortunately, some simple strategies manage downside risk in both bull and bear markets. These strategies include buy stops, buy stop-limits, sell stops, and sell stop-limits. Below are some techniques investors can use to place them effectively in any type of market condition.

Types Of Sell Stops

Sell stop and sell stop-limit orders offer two powerful methods to protect long positions. A sell stop order, often referred to as a stop-loss order, sets a command to sell a security if it hits a certain price. When the security reaches the stop price, the order executes, and shares or contracts are sold at the market. The sell stop is always placed below the security’s market price. (To learn more, read The Stop-Loss Order – Make Sure You Use It.)

A sell stop-limit order sets a command to sell a security if a specific price is reached as long as the price does not fall below the limit specified by the investor or trader. When the security reaches the stop price, the order is converted into a limit order, which is executed at the specified limit price or better.

Neither order gets filled if the security does not reach the specified stop price. (To learn more, read Exit Strategies: A Key Look.)

The Short Guide To Insure Stock Market Losses

Putting Sell Stops in Place

The proper use of sell stop and sell stop-limit orders lowers risk and protects your investments, up to a point. These tools keep the decision-making process simple and unemotional, even when the market is in turmoil. They also improve risk management skills by identifying key price zones in advance and increasing the conviction needed to hold firm between those actionable levels.

There are two common methods used to place sell stops, but no magic number or formula will work 100 percent of the time. Also, stops can be raised as the security gains ground.

The first method is to place the stop below the support level. Identify a support level by looking at a chart and finding where it stopped falling during prior downturns. A break below this price often means the security will head even lower before reversing. (To learn more, read Support and Resistance Basics.)

The second method is to place the stop 5 to 15 percent below the purchase price depending on the investor’s comfort level. Theoretically, at least, this lowers the likelihood of a catastrophic loss. In addition, identifying the potential downside in advance allows the investor to prepare for a worst-case scenario.

Sell Orders and Stopping Out

When a security falls into the sell stop price and the order is executed, this is referred to as stopping out. So, while sell stop and sell stop-limit orders keep the investor on the right side of the markets, there will be times when those stops execute just before the security reverses in the intended direction.

How can you avoid this? As a general rule, avoid placing stops at round numbers, such as 10, 40, or 100, because many market participants place stop orders at these levels and invite trouble from opportunistic algorithms and market makers. Instead, the investor can place the order at an odd number or in-between round numbers with enough wiggle room to survive a potential last round of selling pressure.

For example, if many traders place sell stops on XYZ at 35. In this scenario, consider placing the sell stop at 34.75 to provide enough room for a final round of sell orders without incurring an unnecessary loss. While the investor does not know exactly where other traders will place their stops, taking crowd behavior into consideration should decrease the likelihood that an investor will stop out during a temporary downdraft.

Buy Stop and Buy Stop-limit Orders

A buy stop or buy stop-limit order protects upside risk if a short sale position moves against the investor (goes higher in this case). Shorts sell an unowned security by borrowing shares or contracts from the broker with the goal of buying them back at a lower price to make a profit. Conversely, the short seller incurs a loss if the security rises and the short seller is forced to buy it back at a higher price. A buy stop order is used to limit the loss or to protect a profit on a short sale and is entered above the market price. The order is executed at the market if the security reaches this price. (For background reading, see the Short Selling Tutorial.)

A buy stop-limit order covers the short sale when a particular price is reached, at which point the order converts into a limit order. The buy stop-limit order will only be executed at the specified limit price or better, similar to the sell stop-limit order.

Putting Buy Stops in Place

Similar to sell stop and sell stop-limit orders, placing buy stop and buy stop limit orders can be tricky. Fortunately, there are two general rules that offer useful guidance about placement:

  1. The investor should place the stop above the resistance level. This is the price where a security has trouble moving higher. The investor can determine the resistance level by looking at a chart and finding where it stopped rising during prior rallies. A breakout above this price often means the security will head even higher before reversing.
  2. Place the stop 5 to 15 percent above the short sale price depending on the investor’s comfort level. These can also be adjusted upward to protect profits.

Buy Orders and Stopping Out

The same techniques used with sell stop and sell stop-limit orders can be applied to buy stop and buy stop-limit orders. These include avoiding round numbers and placing orders around odd numbers.

For example, if many short sellers place buy stops on XYZ at 35. In this scenario, consider placing the buy stop at 35.25 to provide enough room for a final round of buy orders without triggering the stop and incurring an unnecessary loss. While the investor does not know exactly where other shorts will place their stops, taking crowd behavior into consideration should decrease the likelihood that the investor will stop out during a temporary downdraft.

The Bottom Line

Traders and investors can protect themselves from volatile markets and prevent unnecessary losses by using sell stop, sell stop-limit, buy stop, and buy stop-limit orders. Investors should take the time to adapt these tools to their comfort level and risk tolerance.

Top 10 Ways to Stay Safe On Public Wi-Fi Networks

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Free Wi-Fi is a windfall, especially if you’re working from the library or airport, or if you just want to save data on your phone or laptop. Still, you do have to care about security when you’re out and about. Here’s how to surf safely, on any device.

10. Practice Good Internet Hygiene

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Perhaps the first and biggest piece of advice we can give you, beyond software, and beyond tools that promise to protect your privacy, is to practice good internet hygiene. Avoid working with—at least online—sensitive data when you’re using unsecured, public Wi-Fi. It may be a good time to check the news or read your favorite blogs, but it’s probably not the best time to do your online banking, if you catch my drift.

Do I Really Need to Worry About Security When I’m Using Public Wi-Fi?

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Of course, if you have methods to secure yourself like the ones we mention below, you can rest a little easier in this regard, but remember, you should care about security on that coffee shop network. It’s unlikely that someone’s snooping on it, but it only takes once to lead to identity theft , or worse.

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9. Use the Right Networks (and Avoid the Bad Ones)

Not every public Wi-Fi network is created equally. For example, that “Free Airport Wi-Fi” network lurking in the background is undoubtedly worse than any Wi-Fi network provided by one of the coffee shops, stores, or retailers in the airport. Opt for those instead. You’ll appreciate the added security (albeit really only security through obscurity, which is flimsy) as well as the likely improved performance.

All the National Chains That Offer Free Wi-Fi

Sometimes, you just need to quickly grab some free Wi-Fi while you’re walking through town. You…

If you’re curious, you can use tools like WiFox and its mobile apps to map out networks at your airport and choose which ones to use and when. Oh, and in case it needs to be said, if there are questionable networks like “Free Wi-Fi Here!” or “Absolutely Free Internet!” you should probably avoid them .

Holiday Travel Tip: Avoid airport honeypot rogue wifi networks

Air travelers looking to do a little web surfing at the terminal should be on the lookout for…

8. Use Semi-Open Wi-Fi Networks Instead

You may not always have a choice when it comes to what network you use, but if you do have a choice, consider “semi-open” Wi-Fi instead of completely open networks, consider ones that serve airport lounges, nearby coffee shops that have hidden SSIDs or put their passwords on receipts instead of giving them out freely, and so on. Sometimes tools like Wi-Fox , which we mentioned above, have those in their database. You can also turn to Google Places, Yelp, or even good old FourSquare to find those passwords.

Find Free Airport Wi-Fi With This Interactive Map

iOS/Android/Web: Airport Wi-Fi isn’t always easy. Depending on the airport and the terminal, you…

Alternatively, there’s nothing wrong with just asking at the airport information desk, library desk, or coffee shop counter, but if you want to be sneaky, we’ve covered more than a few tricks to get that premium , exclusive wi-fi and obscure yourself from the rest of the masses using the public networks.

7. Turn Off File Sharing and AirDrop Options

You may not be able to control who’s on what network you’re using, but you can control your computer. Regardless of if you’re using a Windows PC or a Mac, your computer probably has some file sharing options that assume you’re on a trusted network, with other trusted computers. Turn off file sharing in Windows and macOS, enable your system’s built-in firewalls, and keep internet-connected apps and services to a minimum. Mac users, take the extra step and set AirDrop to contacts-only . You should do this anyway, but now’s a good time.

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Then, automate those settings so your machine is open when you’re at home or on a trusted network, and then automatically switches to a more secure setup when you’re not. Here’s how.

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6. Turn Wi-Fi Off When Not In Use

One of the basic rules of security is that if you don’t need something connected to a network, don’t connect it. When you’re finished working online, turn Wi-Fi off on your laptop, tablet, or smartphone. It’s a nice security habit to get used to when you’re using untrusted networks (if you have to use them at all), and it’ll also save your battery. It’s easy to do in macOS , and in Windows you can even set your laptop to automatically turn Wi-Fi back on after a short time offline.

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You can take this a step further and download local copies of your email and documents to work with when you don’t have a connection, or use Google Drive offline (or a similar service) to work without internet access, or just grab that movie or playlist to listen to when you’re not connected at all.

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5. Keep Your Antivirus and Antimalware Up to Date

This list is in no particular order, but we’re willing to bet some of you may have expected to see this tip sooner. If you ever use public, untrusted networks, make sure your computer is running some kind of antimalware utility and complementary antivirus utility as well.

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For the former, Malwarebytes is our favorite, and regularly comes out on top of tests . For the latter, you have options . We like Avira for Windows and Sophos for macOS (it’s also available for Windows). Whatever you choose to use, keep it up to date, and keep it running—especially when you’re out and about. Public Wi-Fi networks have been known to inject ads while you browse , and we all know how bad malvertising can be .

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4. Install Privacy-Protecting Browser Extensions

Antimalware is great, but it only really protects you from things you download and execute, barring malvertising or malware winding up on your system through no fault of your own. The next step is to fortify your browser with tools designed to protect your privacy .

The Best Browser Extensions that Protect Your Privacy

There are a ton of browser extensions that promise to protect your privacy, which leads to some…

You probably already use an ad blocker, but a good, customizable one like uBlock Origin gives you control over what’s blocked and what isn’t when you want it, and can lock out just about anything when you need it to. Disconnect is another great option, and protects you from same-network attacks like session hijacking and clickjacking —both of which are still real threats , and can give people access to things like your Amazon account or Facebook account, even if you’re browsing securely.

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It’s not paranoia: Using public or open Wi-Fi networks without taking your security into…

3. Use HTTPS Everywhere You Can

Anywhere HTTPS works, use it—and HTTPS Everywhere, from the Electronic Frontier Foundation —can make sure you do. Of course, not every site supports it, but if it’s available, the add-on will try to bump you over to the secure version of the site, and if it’s not there, you’ll roll back to the plain HTTP version.

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It’s not absolutely perfect security, but making sure your connection to a given site is secure means at the very least the information sent to you (and that you send to the site) is encrypted , which goes a long way to making sure that anyone snooping on your communications doesn’t get anything sensitive. And by “snooping,” we really mean someone just soaking up packets from the network looking for credit card numbers, passwords, or session cookies to access logged-in accounts—not Notoriously Strong Adversaries, from which there’s little recourse (and honestly, not who we’re talking about here.)

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