Today in the world there are many crypto exchanges. Each of them has advantages and disadvantages. We explain how to choose a suitable site
Cryptocurrency attracts traders with the volatility of the course. It can fluctuate by tens or even hundreds of percent per day. For example, on March 12-13, the price of bitcoin collapsed by more than 50%. The Ethereum course also behaved.
This volatility in price has made digital assets a favorite tool for speculators. Users 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 detailed instructions that will help you choose a convenient and reliable trading platform.
First steps
1. When choosing an exchange, it is first of all important to find out 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 are lost, if the account is hacked or temporarily blocked, and so on.
2. It is important to pay attention to the interface . It should be understandable and comfortable. If this is not so, the user can, without understanding the tools of the trading platform, make a technical error that will lead to a loss of funds. This becomes most relevant during cryptocurrency price spikes, when a trader must make quick decisions in order to, for example, sell a cheaper asset or buy it.
3. When searching for a site, 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, sites can add tokens of little-known projects - this is one of the ways to make money. Accordingly, if a company conducts a listing of dubious coins, it exposes the user to the risk of investing in a token issued by fraudsters.
Tools
4. In addition to the interface and the list of cryptocurrencies, you should study the tools that the exchange offers. For example, is there an opportunity to place a stop order on the trading floor. This is an application that allows you to buy or sell cryptocurrency if its price reaches a certain level.
An example . The user purchased 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 drops 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 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 making a profit with this method is not guaranteed. A user who holds cryptocurrency for stacking, even having received 15% of the number of his coins as a reward, may lose on the fall of its rate. Stacking is possible at such popular venues as Coinbase, Kraken, Binance, KuCoin, Poloniex and others. The stakingrewards.com service will help you find the most profitable platform .
Another tool that some exchanges provide is savings or lending . An analogue of a bank deposit with a yield of up to 8% per annum. It is safest to use stablecoins for this, the exchange rate of which, for example, is tied to the US dollar. These options are on the Binance, Poloniex and other exchanges.
Beginning traders looking for quick money can consider exchanges that allow users to trade with marginal leverage . With it, a client can take control of company funds. Such an opportunity is available at Bitmex, ByBit, Binance, OKEx, Deribit, Kraken and many others.
However, using marginal shoulders is not recommended for professionals. To perform such operations, the user leaves his capital on bail. If the borrowed amount is lost, the exchange will take the pledged funds to pay off the debt.
Registration and withdrawal of cryptocurrency
As a rule, people ignore the user agreement. When registering on exchanges, this is strictly forbidden. If you do not know the conditions on which the site operates, then you can lose your money.
5. 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 necessary to withdraw funds.
An example . The exchange attracts customers with a promotion from the “register and win $ 200” category or other similar methods. The user creates an account on the trading floor and transfers funds to it. When it becomes obvious that there are practically no trades on the platform or other negative nuances are found out, the novice trader decides to change the exchange. But it turns out that this is impossible without going through an identity verification procedure, it, in turn, stretches for days, weeks, and months, or does not pass at all without explaining the reasons.
6. Therefore, be sure to check the cryptocurrency withdrawal conditions . They may also indicate, for example, that funds can be withdrawn only once a day, for a certain period, as is the case on the BitMEX derivative platform. This can be a problem if you need money urgently.
7. When choosing a site, 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 talk about the company's reputation. As a rule, popular payment systems do not work with trading platforms that are noticed in illegal activities or have confirmed complaints from customers.
An important aspect among the withdrawal conditions is what fees the site takes for withdrawing cryptocurrency. Of course, it is beneficial for the user to be as low as possible.
Check required
According to Coinmarketcap aggregator, at the moment there are at least 325 trading floors. In fact, this number can 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 may register on a dubious exchange, which will lead to a loss of capital. To avoid this, you should:
8. Be sure to check the trading volume of the exchange. The main part of the platform’s income is commissions that are taken from traders for transactions. If they are few, 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 at other sites - you simply can not sell or buy currencies.
A problem with the trading volume can be identified using aggregators such as Coinmarketcap, Coingecko and others. However, this information should be approached with caution. Companies can make fake deals to overstate trade. You can verify this by looking at the trading history of the platform and exchange glasses for the purchase and sale of assets. If transactions are recorded in the trading history, but the orders for the indicated amounts do not appear in the exchange glasses, then the exchange creates the illusion of trading. As a rule, fake transactions occur with a certain periodicity, for example, once every six minutes, and for almost the same amount.
9. Be sure to familiarize yourself with the history of the exchange , this will help protect yourself and your capital. For example, you can search for information about whether it was subjected to hacker attacks or allowed users to leak data. Even if the funds were not stolen, this may happen in the future. For example, on June 3, 2020, hackers who have access to the data of customers of the Canadian cryptocurrency exchange CoinSquare promised to crack it by replacing SIM cards. Last year, customer information leaked on the trading floor.
More reliable exchanges
The biggest problem with exchanges is centralization. Users store their funds in several shared wallets at the disposal of the trading platform. This poses several risks at once:
hacking by hackers;
Exchange employees can appropriate clients' cryptocurrency;
There may be a failure on the exchange, which will result in loss of access to the wallet.
The solution to this problem is decentralized exchanges (DEX). On such trading floors, users keep funds in their own wallets, between which transactions are made. However, now such platforms are only gaining popularity. There are few customers, and therefore trading activity is low. Examples of such sites: Binance DEX, Poloni DEX, dYdX, WavesDEX, Uniswap, Atomex, Nash and others.
Summarize
When choosing an exchange, you should carefully study the conditions for registration and withdrawal of funds. It is preferable to give preference to large, well-known sites: they have more income, some of which can be aimed at improving the protection system; their leadership is more difficult to commit a crime, since the person is known to the public and financial regulators.
Be sure to check on the Internet whether there are complaints about the trading platform among users, whether it was involved in fraudulent schemes or was subjected to hacker attacks. It is also important to make sure that the exchange has a large trading volume and does not wind it up.
In terms of convenience, it is better to use exchanges that provide a wide range of tools. For example, stop orders, passive income for stacking coins, the ability to open deposits and other options.
And it should be borne in mind that the exchange is not a safe way to store cryptocurrency. If the user only plans to buy and hold Bitcoin or other digital money, it is better to choose a cold wallet or other methods. You can read more about them in our previous article .
In the near future we will release a whole series of training articles in which we will tell you what are the risks of investing in cryptocurrency, how to make money on it, and much more. Follow our materials.
