Trading cryptocurrencies via an exchange platform will turn out to be a challenging task for most people, especially those who are at the beginning of their learning process. If in our previous article we’ve talked about crypto storage, now we want to talk about three important aspects to look for when choosing a proper cryptocurrency trading platform.
As you may already know, regulation is one of the key issues when it comes to dealing with cryptocurrencies. This is a new industry and since it operated in a decentralized way, there is no central authority to supervise it. However, there are some exchanges that are compliant with AML and KYC Policy. That means the transactions conducted through the exchange can be verified because there is fiat money involved. It is critical to avoid exchanges operating from off-shore locations because you can’t have trust in them.
Wide or small crypto coverage?
This aspect remains open for debate since some traders would like to trade via an exchange platform that covers a wide range of cryptocurrencies. However, our advice, especially for beginners, is to work with exchanges that focus on the top cryptocurrencies and have fiat pairs included in their offer. If you’re just getting started, Bitcoin, Ether, XRP, or Litecoin are a few examples of major tokens that you should start with. Liquidity is very good, as compared to other non-popular tokens, and volatility is lower.
In direct correlation with our first important factor, a reliable exchange platform will always support crypto trading against fiat currencies. If you look at all the top exchanges by daily volumes, none of them supports fiat trading and that’s a major downside. Also, fiat to crypto pairs are more liquid and can provide you an easy exit when you want to get out of a position. It’s also cost-effective since you can deposit fiat and immediately exchange it into crypto, not exchange to crypto – then transfer to wallet (pay commission) and only then start exchanging with other tokens you want.
Although we could expand the list, taking into account the above-mentioned aspects will help you choose a proper exchange platform and avoid falling into the traps most of the beginners’ stumble into. Don’t overcomplicate things and focus on what matters. Test the services and don’t judge exchanges based on the online reviews, because what other people say could be false or misleading.