The cryptocurrency attracts traders with the volatility of the exchange rate. It can fluctuate by tens or even hundreds of percent a day.
This volatility in price has made digital assets a favorite tool for speculators. Users trade cryptocurrencies to make quick profits. The most convenient place for this is the exchange. Each of them has its own set of advantages and disadvantages.
When choosing an exchange for crypto trading, it is essential to determine if it has an official representative office in your country. This can simplify and speed up the problem-solving process. For example, if the user’s funds disappear, if the account is hacked or temporarily blocked, and so on.
It is essential to pay attention to the interface. It should be clear and user-friendly. If this is not the case, the user may, without understanding the toolkit of the trading platform, make a technical mistake that will lead to the loss of funds. This becomes most important during sharp jumps in the price of a cryptocurrency, when a trader must make quick decisions in order, for example, to sell a falling asset or buy it.
When looking for a platform for crypto trading, it is essential to consider the number of trading pairs and what cryptocurrencies are represented on it. On the one hand, the more digital assets there are the more opportunities for trading and investing. On the other hand, sites can add tokens of little-known projects; this is one way to make money. Accordingly, if a company lists dubious coins, it exposes the user to the risk of investing in a token issued by scammers.
Moreover, to the exchange mock, it is also essential to pay attention to cryptocurrency signals. Thanks to the bot with signals, you will find out about profitable deals in time.
Crypto exchange tools
Moreover, to the interface and the list of cryptocurrencies, you should study the tools that the exchange offers. For example, is it possible to place a stop order on the trading floor? This tool allows you to buy or sell a cryptocurrency if its price reaches a certain level. For example, the user bought bitcoin at $10,000. Then his rate rose to $10,500. A stop-loss order can be placed at the point of purchase and then close the exchange and go about his business. If the coin price falls to the specified level, the system will automatically sell the asset, and the trader will not lose anything.
Staking is another useful tool for crypto trading. Some exchanges allow you to receive passive income for storing coins. Its size can vary from 1% to 15% and exceed this value. However, it should be borne in mind that profit is not guaranteed with this method. A user who holds a cryptocurrency for the sake of staking, even having received 15% of the number of his coins as a reward, may lose on the fall of its rate.
Another tool is some savings or lending exchanges. Analogue of a bank deposit with a yield of up to 8% per annum. The safest way to do this is to use stable coins, the rate of which, for example, is pegged to the US dollar. These options are available on Binance, Poloniex, and others.
Novice traders looking for quick money can consider exchanges that allow users to trade with margin, leverage. With its help, the client can borrow the company’s funds. However, it is highly discouraged to use margin leverage for non-professionals. If the borrowed amount is lost, the exchange will take the pledged funds to pay off the debt. It is better to pay attention to a bot with cryptocurrency signals, which will be an excellent assistant for beginners and experienced traders.
Registration and withdrawal of cryptocurrency
Generally, people ignore the user agreement. When registering on exchanges for crypto trading, this is strictly prohibited. If you do not know the conditions under which the site operates, you may lose your funds. Be sure to read the terms of registration on the exchange. They can contain a lot of critical information. For example, a company may not provide services to users in your country. Or trading on the exchange will be available only after passing verification (KYC). The same condition is often required for withdrawing funds.
For example, an exchange can attract customers with a promotion from the register and win the $200 category or in other similar ways. The user creates an account on the trading platform and transfers funds to it. When it becomes obvious that there is practically no trading on the platform or other negative nuances become clear, a novice trader decides to change the exchange. But it turns out that this is impossible without going through the identity confirmation procedure, which, in turn, stretches for days, weeks, and months or does not pass at all without explaining the reasons.
Be sure to check the conditions for withdrawing cryptocurrency. They may also indicate, for example, that you can withdraw funds only once a day, in a certain period, as it is arranged on the BitMEX derivatives platform. This can be a problem if you need money urgently.
When choosing a platform for crypto trading, you should study the methods of depositing and withdrawing funds. The more there are, the more convenient it will be to use the exchange. Also, the number of options for withdrawing and replenishing money can speak of the company’s reputation. As a rule, popular payment systems do not work with marketplaces seen in illegal activity or have confirmed complaints from customers. An important aspect among the withdrawal conditions is what fees the platform takes for withdrawing cryptocurrency. Of course, it is beneficial for the user that they are as low as possible.
Be sure to check the trading volume of the exchange
According to the Coinmarketcap, there are currently at least 325 trading platforms for crypto trading. This number could be much higher. However, only a few dozen are popular. All others have a low trading volume, low rating, and a similar interface. For this reason, there is a risk that a novice user could register on a dubious exchange, resulting in a loss of capital. To avoid this, you should:
Be sure to check the trading volume of the exchange. The main part of the site’s income is commissioned that are taken from traders for making transactions. If there are few of them, this increases the risk of bankruptcy of the exchange, and it will be difficult for you to trade. Even if the declared rate is higher than on other sites, you simply cannot sell or buy currencies.
You can identify a problem with the trading volume using Coinmarketcap, Coingecko, and others. However, this information should be approached with caution. Exchanges for crypto trading can make fake transactions to inflate the trading volume. You can check this by looking at the trading history of the platform and order books for buying and selling assets. If transactions are recorded in the trading history, but orders for the indicated amounts do not appear in the order books, then the exchange creates the illusion of trading. As a rule, fake transactions occur with a certain frequency, for example, once every six minutes and for almost the same amount.
Be sure to read the reviews of the exchange for crypto trading; this will help protect yourself and your capital. For example, you can search for information about whether it has been hacked or leaked user data. Even if the funds were not stolen, this might happen in the future.
The biggest problem of exchanges for crypto trading is centralization. Users store their funds in several shared wallets at the disposal of the trading platform. This creates several risks at once:
Hacking by scammers.
Exchange employees can appropriate the clients’ cryptocurrency.
The exchange may crash, due to which access to the wallet will be lost.
The solution to this problem is decentralized exchanges (DEX) for crypto trading. On such trading platforms, users keep funds in their wallets, between which transactions are made. However, these platforms are only gaining popularity now. There are few clients, and therefore the trading activity is low. Examples of such platforms: Binance DEX, Poloni DEX, dYdX, WavesDEX, Uniswap, Atomex, Nash, and others.
When choosing an exchange for crypto trading, carefully study the conditions for registration and withdrawal of funds. It is desirable to give preference to large, well-known sites. They have more income, some of which can be used to improve the protection system. In addition, it is more difficult for their leadership to commit a crime since the person is known to society and financial regulators.
You should check on the Internet if there are any complaints from users about the trading platform, whether it has been involved in fraudulent schemes or subjected to hacker attacks. It is also essential to make sure that the exchange for crypto trading has a large trading volume.
From a convenience point of view, it is better to use crypto trading exchanges that provide a wide range of tools. For example, stop orders, passive income for staking coins, the ability to open deposits, and other options.
It should be borne in mind that the crypto trading exchange is not a secure way to store cryptocurrency. If the user only plans to buy and hold Bitcoin or other digital money, choosing a cold wallet or other methods is better.
Get access to our Lorentzian machine learning algorithm by signing up to Bybit using our affiliate link.👇
Trading is hard on newcomers, and cryptocurrency trading hasn’t got much fundamentals to base your trades upon, that’s why traders will find this resource very informative and helpful alongside our cryptocurrency trading signals .