Before starting to trade, you should know by now what are the types of currencies you want to trade, who your targets are, what are the risks, and what’s your knowledge about the whole process. These are the basic question that you should know, or if not yet – the questions you should find out.
An Exchange is a platform used to assist the process of buying, selling and trading different cryptocurrencies. Unlike trading, an exchange doesn’t have a broker or middleman. Be careful though as not all of the exchanges are equal.
Finding the right platform can be a long process for those who do not know what they are looking for, so knowing what you want in a platform can be of great advantage. There are a lot of choices to pick from and each has its own features that can be very enticing at first.
With the growing number of Exchange platforms, finding the most suitable platform to buy and sell your asset is a slow process. Signing up on the platform is too time-consuming as well. It requires a lot of information, verification, and etc. before you can finally get in. Typing a lot of data can be very exhausting but very rewarding once you are in.
There are lots of available exchanges where you can buy, sell and trade cryptocurrencies. All of them are offering different unique features unique, making it hard to find the right fit for you. To ensure that you’ve opened the right exchange based on your expectations, requirements and what you feel is best, there are different factors that you have to consider.
Does the exchange have the currency you want to trade?
Does the exchange have all, if not, most of what you need?
How secure is the exchange?
Is the exchange available in most countries?
Do they offer insurance?
Does the exchange has a good reputation?
These questions are basic but very important factors to consider when choosing what Exchange is suitable for you. Apart from this, there are 2 other factors that you must know and understand. Firstly, what kind of exchange do you need? Secondly, what other factors do you need to consider?
Brokerage - This is the type of exchange that’s suitable for those who are starting out. This will allow traders to buy, sell and trade directly to the platform. Verifying your account is needed and this will be done by providing personal information.
Peer-to-Peer (P2P) - If you’re someone who loves privacy, P2P exchange is the best for you. This platform allows two individuals to trade anonymously. Each will decide on the price and payment method they both prefer. Most P2P platforms also act as an escrow to the traders to ensure the legitimacy of each trader, and in case there is a dispute to make, it will be easier.
Full Trading Platform - Full Trading platform is similar to the real stock market. It has a large number of traders that allows them to do different things like trading, buying or selling different currencies. Some of the big platforms even have features like the book to match, buy and sell, special orders, graphs, and etc. This only available for premium users and not for the beginner users.
It is important to know what are the different trading options that the Exchange offers. The cryptocurrency market is very volatile and this feature is very important as it helps you easily shift into a different trading strategy when the market changes. Some of the platforms only support the most popular currencies and some platforms support a wide range of currencies – popular or new. If you are new to trading, the simple exchange the better. However, if you’re an experienced trader you might want to go with margin trading, advanced order types and complex charts.
One of the most important features to consider in trading is Liquidity. It is the indicator of how easy it is to buy, trade and sell in exchange. The liquidity should be high in order to consider it a good exchange. With high liquidity, there is a huge number of buyers or sellers. Thus, they will get sufficient orders and easily match buyers and seller. It is as good as it leads to better price discovery and it allows you to transact faster.
Since trading involves money, the Exchange’s security and confidentiality features should be seriously taken into consideration. How secure is this exchange? As much as possible, avoid the exchange’s website that starts at HTTP only. The exchange’s website should start at HTTPS. To ensure the safety of your coin, you should know the level and type of security mechanisms that an exchange has. It will be good if an exchange’ security practices include – keeping deposits in cold storage, availability of 2-factor authentication (2FA) option, 24/7 monitoring, email encryption, and verification.
Customer support should be easy to reach and as much as possible be available 24/7. It can be frustrating if you encountered a problem or an issue and you have to wait for long hours before you get a response. Issues – such as verification process, deposit/withdrawals, funds reflection, disputes, and trading orders should be solved quickly by the Exchange. If not, it could compromise your time, money and well-being. Having a knowledgeable and responsive real-time customer support can save you from frustration and time.
Each platform has different fees depending on the type of user – some may be higher and some may be lower. Compare all the fees of different exchanges and different charges for each transaction then see what will benefit you the most. If you’re a constant trader, low transaction fees on buying and selling would relatively prevent your margins to be eaten away. Remember, the higher the fees and charges are, the lesser your trade value you’ll get. Keep an eye on the hidden charges as well.
How’s the user interface? Did you have a hard time learning the interface? For beginners, it is best to start with a simple, clean and basic exchange design that is easy to navigate. If you are an experienced trader, our recommendation will be the platform with more advanced options, developed and complex interface. Overall, to avoid confusion the user interface of the exchange should be easy to use, simple and clean as possible.
Choosing an exchange can be time-consuming indeed, but it is always better to spend some time than to choose the wrong one and lose all your cryptocurrencies. There’s nothing wrong with being cautious. Always be aware and smart with your decisions and again, choose whatever will benefit you the most. We hope that this a guide has been informational in choosing the best exchange for your needs!
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