Trading cryptocurrencies is an excellent opportunity to make money on changes in the price of an asset. The volatility of virtual coins remains quite high. The fluctuation of the exchange rate per day can be several percent, which means you can get a good profit.
You can trade cryptocurrency on crypto-exchanges. This article will talk about trading on cryptocurrency exchanges since they are specialised platforms for performing trading, exchange operations with virtual coins.
Crypto trading trades take place around the clock 24/7 without interruption due to their decentralisation. You can trade for the growth and fall of the asset. At the moment, there is a rise in major cryptocurrencies with short pullbacks. For trading cryptocurrencies, you can apply some strategies and technical analysis used in forex.
What are cryptocurrency exchanges for trading
The crypto exchange is the main tool for buying and selling digital assets. However, there are so many species today cryptocurrency exchanges that you will have to spend enough time to understand which platform will best suit your specific needs before starting trading.
Cryptocurrency exchanges operate on the same principle as regular stock exchanges. The difference is only in the types of assets used. As a result, trading on the crypto exchange is more dynamic and risky due to the coins’ high volatility.
Cryptocurrency exchanges are the most active and essential service category in the crypto economy. They come in different formats and types to suit all users’ needs, be it a beginner purchasing their first cryptocurrency or professional trading for many years.
The platforms can offer their users various additional functions that increase trading convenience, reduce risks, etc. Some sites’ functionality is so wide that it is suitable for experienced traders, while others, on the contrary, are quite simple and focused on a quick exchange of crypto for fiat or vice versa.
Cryptocurrency exchanges are classified according to several criteria by the principle of work.
Centralized crypto exchange
This means creating an account, storing all information about the crypto trader on servers, balances, open positions. Susceptible to hacker attacks, as well as government censorship. Centralized exchange is a standard business with a registration authority and physical office location.
Decentralized crypto exchange for crypto trading
They work on the blockchain, are free from censorship, there is no risk of account hacking and theft of funds. Minus lies in the fact that illegal transactions can indeed be carried out through such sites. Besides, while decentralized exchanges are less popular, trading volumes on them are small, which causes all sorts of problems, such as a lack of coins to create a large order.
Adjustable crypto exchange
Used primarily by institutional investors looking for impeccable compliance legality in all actions. The government accredits such exchanges, all transactions on them are tracked, and each user must necessarily confirm his identity or information about the company he represents.
Unregulated crypto exchange
Used by small and medium-sized crypto traders. Since there are many more, the total liquidity and trading volumes on such platforms are higher than on regulated ones. This option is suitable for those who tend to hold anonymity of their actions with cryptocurrencies, do not want to verify the identity, or are afraid of questions from the outside government. Confidentiality and speed of financial transactions are important for the business. Lack of anonymity when making payments can hurt your business. When using fiat money, only the tax office can access the company’s financial statements.
Crypto exchange with a fiat gateway for crypto trading
Fiat money is a national currency. Some sites connect the ability to replenish and deposit funds through payment systems. For many users, this is a decisive criterion for comfortable trading.
Crypto exchange without fiat gateway
To replenish the account of such an exchange or, conversely, withdraw funds from it, you will have to use the third link. For example, exchange fiat for cryptocurrency through an exchanger and only then make a deposit by trading opportunities.
Margin crypto exchange
This is provided by the exchange of additional funds for trading, which will then need to be returned with interest.
Spot crypto exchange for crypto trading
Only half of the exchanges support margin trading; the rest do not implement such a function limited to regular spot trading, which implies instant settlement between market participants. The main reason for this is the close attention of the American SEC. Trading with leverage significantly increases the risks when the fact that the crypto market is already associated with high risk due to volatility.
Liquid crypto exchanges
Liquidity is the ability to sell an asset at the best value quickly. Many users distinguish liquid exchanges, a lot of orders are created every second, and therefore trading on them is carried out in a matter of seconds. Popular cryptocurrencies are always more liquid than less popular ones.
Illiquid crypto exchange
Some sites offer a limited selection of currency pairs, some of which are not in demand. Exchanges periodically cleanse such pairs. By the degree of information disclosure.
Crypto exchanges with no verification
Platforms allow you to use full functionality without verification. This means that they do not require documentary proof of identity. These are decentralized platforms.
KYC and AML
KYC is the principle of the financial exchanges that obliges them to identify the counterparty before carrying out a financial transaction. The purpose of such a policy is to better understand the clientele, monitor financial transactions, reduce client risks, and prevent bribery and corruption.
AML is an international non-governmental organisation that works to combat money laundering.
These are regulations designed for the safety of customers and used as in traditional financial systems, as well as in cryptocurrencies. However, this contradicts the anonymity system inherent in the blockchain. Exchanges have to make concessions on the requirements of regulators.
Verification on demand crypto exchange
Most platforms allow trading without verification, enough confirmation by email or SMS. But those who want to use advanced functionality, for example, increased withdrawal limits, still need to go through verification. This is the most common scheme.
How to choose the right exchange for crypto trading?
- You need to ensure that the developers do not neglect security to choose an exchange for crypto trading. Sometimes the terms of trade seem to be very profitable, but this is because the management decided to save money on protection methods. Low fees are good, but they will not help exchange hacking and loss of funds.
- You should pay attention to the reputation of the crypto trading platform. Large exchanges that have been operating for many years are less likely to face fraud. If you still want to try your luck on a little-known crypto exchange, you should carefully study the reviews.
- You need to decide for what purposes the platform is needed: what and how often trading will occur. The costs of commissions depend on this.
Cryptocurrency trading process on the exchange
The stages that a crypto trader will have to face when starting work on the exchange.
Account registration. As a rule, it is not difficult to enter an email or phone number, come up with a password, confirm an email/phone number.
Verification of personal data where it is needed. You will need a scan of an identity card, a photo with a document, providing information about the address of residence, often some other parameters. Consideration of an application for verification takes some time; the results are reported by email.
Balance replenishment. It is carried out either through payment systems or by transferring cryptocurrency to the deposit page’s address. You need to transfer a strictly selected cryptocurrency; otherwise, you will lose money forever.
Crypto trading. Buying / selling certain trading assets using the trading terminal, which is available on each exchange.
Withdrawal of funds. Some exchanges charge a commission; some do not (but when withdrawing a crypt, you still have to pay a commission).
Exchanges for trading cryptocurrency
| Cryptocurrency exchange | License | Currencies you can trade | Why is this exchange good for newbies? |
| Coinbase | Coinbase is one of the most popular crypto trading exchanges is fully regulated and licensed by the SEC in the USA and FCA in the UK. | This crypto exchange trades the largest capitalization like Bitcoin, Ethereum, Bitcoin Cash, Litecoin and has its own currency. | This exchange has a simple and intuitive interface that will help the crypto trader quickly understand the platform. The platform has training materials and provides information on market news. |
| Binance | Binance is SEC-licensed and available in 28 US states. Binance offers cryptocurrency derivatives, which the FCA has banned from sale to UK consumers. | This exchange offers trading with more than 45 virtual coins, including BTC, ETH, LTC, and BNB. Spot trading is available on the exchange, with perpetual contracts for Binance Futures. |
Beginners will be comfortable using the Binance exchange as it has an intuitive interface. This exchange has tutorials to help beginners invest. |
| Bisq | Bisq is free software released under version 3 of the GNU Affero General Public License. | Bisq offers trading in several fiat currencies, including the US dollar. On this exchange, you can only trade Bitcoin and no other cryptocurrencies. | A very simple user interface will help you easily understand the platform and start trading. Moreover, the Bisq exchange does not control the funds of the crypto trader, which means that no one but you will touch your funds. |
Basic crypto trading rules
There are some key rules that any aspiring crypto trader should know.
- Diversification is the main principle of risk management. Work with only one, even the most popular exchange, shortsighted and risky, just like investing in one asset.
- You cannot be distracted from the chosen strategy. Succumbing to emotions and jumping from one path to another, more the likelihood of getting a loss than a profit.
- Do not take loans. It is not about margin trading but real loans. Many traders take such a step in the hope of quickly recapture investments and stay with a profit in your pocket.
- Pay attention to fundamental analysis, not just technical, to not miss the tipping point of the trend. Besides, follow political and economic news.
- It is imperative to use stop loss and take profit orders minimizing risks. Rely only on analytics and facts, not intuition and luck.
Compliance with these simple rules will significantly reduce the likelihood of losing investments on the first day.
The cryptocurrency sphere is developing rapidly; new trading platforms are opening, new projects appear. All this gives a huge scope for earning. It is also noteworthy that you can start with minimal investment. Trading on the crypto market is very unpredictable and risky, but at the same time, volatile. It gives the crypto trader a chance to make good profits in a short time frame. You need to have your own strategy, act based on analysis, be aware of crypto news, and not give in to emotions to be a successful trader. Don’t forget to use crypto signals and bots to automate trades.