Should I have prior trading experience before trading in a liquidity pool?

Asked 2 years ago

I decided to join the decentralized finance world and tried initiating my first exchange on UniSwap. Keep in mind that the most experience I have is paper trading Forex. I have some USDC, so I tried exchanging it for a few UNI tokens (not knowing what I was doing), but I kind of thumb-sucked and lost some money (luckily, not much). I'm worried that I will lose more money if I continue trading on a DEX with my lack of crypto trading experience.

Silas Albert

Monday, September 26, 2022

You don’t need prior experience to trade in a decentralized exchange (DEX). A DEX allows crypto users to swap digital assets on a peer-to-peer (P2P) basis. Basically, you are required to connect your web3 wallet and select the coins you want to swap. Besides, you should set the right slippage tolerance – the maximum percentage of price movement you can live with. Anything above that will make your trade fail to execute. The default slippage tolerance for Uniswap is 0.5%, but it’s adjustable. Generally, low liquidity can lead to high slippage – this is why big orders seem to have increased slippage.

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