How to choose an exchange for trading cryptocurrency

Today we want to tell you how to choose an exchange to buy cryptocurrency. Today there are many cryptocurrency exchanges in the world. Each of them has advantages and disadvantages. Let’s explain how to choose the right platform

Cryptocurrency attracts traders by its rate volatility. It can fluctuate by tens or even hundreds of percent per day. For example, the price of bitcoin collapsed by more than 50%. Ethereum also behaved in the same way.

This instability in price has made digital assets a favorite tool for speculators. s trade cryptocurrency in order to make quick profits. The most convenient place for this is exchanges. Each of them has its own set of advantages and disadvantages. We have prepared a detailed guide to help you choose a convenient and reliable trading platform. Choose the most profitable exchange will help crypto platforms tgdratings.com.

The first steps

1. When choosing an exchange, first of all, it is important to find out whether it has an official representative office in Russia. This can simplify and expedite the process of solving problems. For example, if the ’s funds are lost, if the is hacked or temporarily blocked, and so on.
2. It is important to pay attention to the interface. It should be clear and convenient. If it is not, the can, not understanding the tools of the trading platform, make a technical error, which will lead to the loss of funds. This becomes most relevant during sharp jumps in the price of cryptocurrency, when the trader must make quick decisions, for example, to sell the cheapening asset or to buy it.

3. When searching for a platform, it is important to consider the number of trading pairs, as well as what cryptocurrencies are represented on it. On the one hand, the more digital assets, the more opportunities for trading and investing. On the other hand, platforms can add tokens of little-known projects – this is one of the ways to make money. Accordingly, if a company lists dubious coins, it exposes the to the risk of investing in a token issued by fraudsters.

Tools

In addition to the interface and the list of cryptocurrencies, you should examine the tools that the exchange offers. For example, whether the trading floor has the option to place a stop order. This is a bid that allows you to buy or sell a cryptocurrency if its price reaches a certain level.

Example. A purchased a bitcoin at $10,000. Then its price went up to $10,500. A stop-loss order can be placed at the buy point and then close the exchange and go about his business. If the price of the coin falls to the specified level, the system will automatically sell the asset and the trader will not lose anything.

Stacking is another useful tool. Some exchanges allow you to receive a ive income for storing coins. Its size can vary from 1% to 15% and exceed this value. However, it should be taken into that making a profit with this method is not guaranteed. A who keeps a cryptocurrency for the sake of stacking, even after receiving 15% of the number of their coins as a reward, can lose on the fall of its rate. Stacking is possible on such popular platforms as Coinbase, Kraken, Binance, KuCoin, Poloniex and others.

Another tool that some exchanges provide is savings or lending. It is analogous to a bank deposit, with an annual yield of up to 8%. The safest way to do this is to use stabelcoins, the rate of which, for example, is tied to the U.S. dollar. These options are available on the stock exchanges Binance, Poloniex and others.

Beginner traders looking for quick money can consider exchanges that allow s to trade with a marginal, leveraged option. With his help, a client can take control of the company’s funds. Such an opportunity is available on Bitmex, ByBit, Binance, OKEx, Deribit, Kraken and many others.

However, it is not recommended for non-professionals to use margin leverage. To perform such operations, the pledges his capital. If the borrowed amount is lost, the exchange will take the pledged funds to repay the debt.

Registration and withdrawal of cryptocurrency

As a rule, people ignore the agreement. When ing on exchanges, you should not do so categorically. If you do not know the conditions on which the site works, you can lose your funds.

Be sure to read the of registration on the exchange. They may contain a lot of important information. For example, the company may not provide services to s from your country. Or trading on the exchange will only be available after verification (KYC). The same condition is often required for withdrawal of funds.

Example. The exchange attracts clients with a promotion from the category “sign up and win $200” or other similar methods. The creates an 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 are discovered, the novice trader decides to change the exchange. But it turns out to be impossible without the confirmation of the identity, which lasts for days, weeks and months or does not take place at all without any explanation.

Therefore, be sure to check the of withdrawal of cryptocurrency. They may also specify, 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 the money urgently.

When choosing a site, you should study the ways to deposit and withdraw funds. The more of them, the more convenient it will be to use the exchange. Also, the number of withdrawal and deposit options may indicate the reputation of the company. As a rule, popular payment systems do not work with exchangers that have been found to have engaged in illegal activities, or have confirmed complaints from customers.

An important aspect among the conditions of withdrawal – what fees the site takes for withdrawal of cryptocurrency. Of course, it is beneficial for the to keep them as low as possible.

It is obligatory to check

According to the Coinmarketcap aggregator, there are currently at least 325 trading platforms. In reality, this number could be much higher. However, only a few dozen are popular. All the rest have a small trading volume, low rating and similar interface. For this reason, there is a risk that a novice may on a dubious exchange, which will lead to 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 commissions, which are taken from traders for transactions. If they are small, firstly, it increases the risk of bankruptcy of the exchange, and secondly, it will be difficult for you to trade. Even if the declared rate is higher than on other exchanges – you simply will not be able to sell or buy currencies.

You can use aggregators like Coinmarketcap, Cooingecko and others to identify the problem with trading volume. However, this information should also be treated with caution. Companies may make fake trades to inflate the trading turnover. You can check this by looking at the trading history of the platform and the stock charts for buying and selling assets. If transactions are recorded in the trading history, but in the stock market orders for specified amounts do not appear, it means that the exchange creates an illusion of trade. As a rule, fake trades occur with a certain periodicity, for example, every six minutes, and for almost the same amounts.

Be sure to familiarize yourself with the history of the exchange, it will help protect yourself and your capital. For example, you can look for information on whether it has been subjected to hacking attacks or leaked data. Even if funds have not been stolen, it could happen in the future. For example, on June 3, 2020, hackers who have access to customer data at Canadian cryptocurrency exchange CoinSquare promised to hack it with SIM card swaps. Last year, the trading platform leaked customer information.

More reliable exchanges

The biggest problem with exchanges is centralization. s store their funds on several shared wallets at the disposal of the trading floor. This generates several risks at once:

• hacking by hackers;
• exchange employees can misappropriate customers’ cryptocurrencies;
• the exchange may malfunction, so access to the wallet will be lost.
• The solution to this problem are decentralized exchanges (DEX). On such exchanges, s hold funds in their own wallets, between which transactions are made. However, now such platforms are only gaining popularity. There are few clients, so trading activity is low. Examples of such sites: Binance DEX, Poloni DEX, dYdX, WavesDEX, Uniswap, Atomex, Nash and others.

To summarize

When choosing a marketplace, you should carefully study the conditions for registration and withdrawal of funds. It is desirable to give preference to large, well-known exchanges: they have more income, part of which can be used to improve the security system; their management is more difficult to commit a crime, because the identity is known to society and the financial regulators.

It is mandatory to check on the Internet if there are no complaints about the trading platform among its s, if it has not been involved in fraudulent schemes or has been subjected to hacking attacks. It is also important to make sure that the exchange has a large trading volume and at the same time does not inflate it.

In of convenience, it is better to use exchanges, which provide a wide range of tools. For example, stop orders, ive income for stacking coins, the ability to open deposits and other options.